U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
General Form For Registration of Securities
Of Small Business Issuers under
Section 12(b) or (g) of The Securities Exchange Act of 1934
Rad Source Technologies, Inc.
(Name of Small Business Issuer in its charter)
Florida
(State or other jurisdiction of incorporation or organization)
65-0882844
(I.R.S. Employer Identification No.)
475 Ramblewood Drive, Coral Springs, Florida 33071
(Address of principal executive offices) (Zip Code)
(954) 755-1827
(Issuer's telephone number)
Securities to be registered under Section 12(b) of the Act:
None
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $.001
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TABLE OF CONTENTS
Part I
Item 1. Description of Business ......................................... 4
Item 2. Plan of Operation ............................................... 9
Item 3. Description of Property ......................................... 10
Item 4. Security Ownership of Certain Beneficial
Owners and Management ....................................... 10
Item 5. Directors, Executive Officers, Promoters
and Control Persons ......................................... 11
Item 6. Executive Compensation .......................................... 13
Item 7. Certain Relationships and Related Transactions .................. 14
Item 8. Description of Securities ....................................... 15
Part II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Shareholder Matters ................. 16
Item 2. Legal Proceedings ............................................... 17
Item 3. Changes in and Disagreements with Accountants ................... 17
Item 4. Recent Sales of Unregistered Securities ......................... 17
Item 5. Indemnification of Directors and Officers ....................... 18
Part F/S
Financial Statements ...................................................... 19
Part III
Item 1. Index to Exhibits ...............................................
Item 2. Description of Exhibits .........................................
Signatures ................................................................
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THIS REGISTRATION STATEMENT CONTAINS CERTAIN FORWARD LOOKING STATEMENTS WITHIN
THE MEANING OF THE PRIVATE SECURITIES REFORM ACT OF 1995. THE REGISTRANT INTENDS
THAT SUCH FORWARD LOOKING STATEMENTS BE SUBJECT TO THE SAFE HARBORS CREATED
THEREBY. THESE FORWARD LOOKING STATEMENTS INCLUDE STATEMENTS REGARDING (I) THE
REGISTRANT'S RESEARCH AND DEVELOPMENT PLANS, MARKETING PLANS, CAPITAL AND
OPERATIONS EXPENDITURES, AND RESULTS OF OPERATIONS; (II) POTENTIAL FINANCING
ARRANGEMENTS; (III) POTENTIAL UTILITY AND ACCEPTANCE OF THE REGISTRANT'S
EXISTING AND PROPOSED PRODUCTS; AND (IV) THE NEED FOR, AND AVAILABILITY OF,
ADDITIONAL FINANCING.
THE FORWARD LOOKING STATEMENTS INCLUDED HEREIN ARE BASED ON CURRENT EXPECTATIONS
AND INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES. THESE FORWARD LOOKING
STATEMENTS ARE BASED ON ASSUMPTIONS REGARDING THE REGISTRANT'S BUSINESS AND
TECHNOLOGY WHICH INVOLVE JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS, FUTURE
SCIENTIFIC, ECONOMIC, REGULATORY AND COMPETITIVE CONDITIONS, AND FUTURE BUSINESS
DECISIONS, ALL OF WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND
MANY OF WHICH ARE BEYOND THE CONTROL OF THE REGISTRANT. ALTHOUGH THE REGISTRANT
BELIEVES THAT THE ASSUMPTIONS UNDERLYING THE FORWARD LOOKING STATEMENTS ARE
REASONABLE, ANY OF THE ASSUMPTIONS COULD PROVE INACCURATE AND, THEREFORE, ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE SET FORTH IN THE FORWARD LOOKING
STATEMENTS. IN LIGHT OF THE SIGNIFICANT UNCERTAINTIES INHERENT IN THE FORWARD
LOOKING INFORMATION CONTAINED HEREIN, THE INCLUSION OF SUCH INFORMATION SHOULD
NOT BE REGARDED AS ANY REPRESENTATION BY THE REGISTRANT OR ANY OTHER PERSON THAT
THE OBJECTIVES OR PLANS OF THE REGISTRANT WILL BE ACHIEVED.
PROSPECTIVE INVESTORS SHOULD READ THIS MEMORANDUM CAREFULLY BEFORE MAKING ANY
INVESTMENT DECISION REGARDING THE COMPANY, AND SHOULD PAY PARTICULAR ATTENTION
TO THE INFORMATION CONTAINED UNDER THE HEADING "RISK FACTORS." IN ADDITION,
PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN ADVISORS IN ORDER TO UNDERSTAND
FULLY THE CONSEQUENCES OF AN INVESTMENT IN THE COMPANY.
PART I
References herein to "We," "Us," or the "Company" refer to Rad Source
Technologies, Inc. and their subsidiaries.
Item 1. Description of Business
(a) Business Development.
We were incorporated in the State of Florida on July 2, 1990 as Computer
Vending, Inc. On December 24, 1998, we entered into an agreement with Rad
Source, Inc. (hereinafter "Rad Source"), a Florida corporation, and the
holders of 100% of their issued and outstanding shares, whereby we
acquired all of the outstanding
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shares of Rad Source in exchange for 2,278,266 (Pre-split) or 759,422
(Post-split) newly issued shares of our Company. At the closing of the
transaction, the shareholders of Rad Source obtained control of our
Company, and we changed our name to Rad Source Technologies, Inc. Our then
existing directors and executive officers resigned and were replaced by
designees of Rad Source, which became our wholly owned subsidiary.
Rad Source was incorporated in the State of Florida in October of 1996.
Since incorporation, Rad Source has engaged in the development our
products described below. On September 9, 1999, we reverse split our stock
on a (3) three for (1) one share basis. All references to our shares
contained in this registration reflect the stock split of September 9,
1999, unless otherwise indicated. We have not been involved in any
bankruptcy, receivership or similar proceeding.
(b) Business of Issuer.
The following is a description of our business. References to our business
and operations include both our operations and those of Rad Source, our
wholly owned subsidiary, unless otherwise specifically indicated.
Our machines are based on technology developed and research conducted by
our President and Director, Randol Kirk. Mr. Kirk currently owns the
technology used for our machines. We have a license agreement with Mr.
Kirk, which allows us to sell the two products utilizing this technology.
(See Item 7. Certain Transactions)
We have developed two machines designed to replace radioactive sources
with common x-ray, which has been traditionally used in imaging
applications for airport scanners and medical x-rays. Irradiation is the
process of killing organisms in a product by using high doses of gamma or
x-rays to stop the reproduction of such organisms. Our products are
designed to replace regulated, nuclear irradiation devices with x-ray
technology that allow size, efficiency and cost to be optimized for
application in the medical and industrial markets. Our products are
manufactured to be immediately applicable to resolving highly publicized
public health and consumer issues.
X-ray machines are significantly less expensive to manufacture, require
significantly less site cost and do not require disposal of radioactive
waste. The key advantages of an X-ray source are:
(1) There are no disposal problems;
(2) No Nuclear Regulatory Commission licensing or reporting;
(3) There is no risk of radiation when the devise is in the off
position;
(4) Service rates of the devise are compatible with that of other
electronic equipment; and
(5) reduced operator exposure and safety risk.
X-ray machines require a larger expense for electricity, and they are less
penetrating and less efficient when produced.
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(1) Principal Products and their Markets
We have developed two products to date, both of which are discussed
below.
RS2000
The RS 2000 used to irradiate human cells, bacteria, and small
animals. The irradiation of these organisms is used in various
aspects of cancer research to determine appropriate levels of cancer
treatment for humans. To date we have delivered one RS 2000 to
Precision Therapies, Inc. to be used in cancer research. The
manufacturing of our RS 2000 is not subject to FDA approval, but its
applications are covered by FDA and USDA regulations.
RS3000
The RS 3000 Blood Irradiator was developed to replace existing
radioactive cesium units currently in service and for use in
additional facilities that want alternatives without radioactive
sources on premises. This machine is capable of replacing low dose
gamma irradiation. The RS 3000 Shielded Cabinet X-ray Source is
designed to irradiate blood and blood products packaged in
transfusion bags when irradiation for Graft Versus Host Disease
("GVHD") is necessary. GVHD is a life threatening complication
arising from transfusion recipient's reaction to the white blood
cells acquired in a transfusion from a blood donor. This disease
occurs when the blood or blood product makes antibodies against the
recipient tissues and tries to destroy the recipient tissue as if it
were a disease. The machine can irradiate a single transfusion bag
or its equivalent thereby reducing the risk of GVHD for transfusion
recipients. We received FDA clearance for this product on March 30,
1998.
Orders
We have had orders for two RS 3000 units and one for the RS 2000, as
of the date of this registration statement. We have received $5,400
of the $65,000 total purchase price in payment on the first RS 3000
unit order and $16,000 of the $ 89,000 total purchase price in
payment on the second RS 3000 unit order. We have received $0 of the
$ 69,000 total purchase price in payment on the RS 2000 unit. All of
these units have been delivered to the purchasers. There can be no
assurance that these orders will not be rescinded or will be fully
paid for, either of which could have a material adverse effect on
our business and operations.
We have entered into an agreement with USI, Inc., whereby USI, Inc.
will act as the exclusive distributor of our RS3000 within Maine,
Massachusetts, Vermont, New Hampshire, Delaware, New York, New
Jersey and Rhode Island, provided that they sell 8 of our RS3000
units to third parties each year. Should USI, Inc. fail to sell at
least 8 RS3000 units, the agreement may be immediately terminated at
our option.
There can be no assurance that we will be successful in developing,
delivering and marketing, on a timely and cost effective basis, any
of our products. Moreover, there can be no assurance that we will be
able to successfully develop product enhancements or new products
that respond to technological change, evolving industry standards or
customer requirements. There can be no assurance that we will not
experience difficulties that could delay or prevent the successful
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development, introduction or marketing of our products or that our
products will achieve market acceptance.
Marketing
We market our products and services through our existing in-house
staff. We obtain most contracts through personal contacts of our
President, Mr. Randol Kirk. Management cannot anticipate the nature
or extent of additional marketing support which may be required to
market our products, as the nature and cost of such marketing will
depend, in part, upon the initial marketplace acceptance of our
products. There is no assurance that we will have sufficient funds
available to hire additional marketing persons, or that, if hired,
the efforts of such persons will be effective in marketing our
products.
We plan to develop a sales and marketing plan for our products, but
there can be no assurance that such plan will be developed or that,
once developed, we will be able to effectively market and sell such
products in the future. To date, we have not developed any criteria
for the sales and marketing plan of our products.
(2) Distribution Methods.
Distribution of our products will be handled on an individual basis
depending on the needs of the consumer. There can be no assurance
that we will be able to produce and manufacture our products on a
timely basis for each order.
(3) Status of any Publicly Announced New Product.
We currently have no publicly announced new products.
(4) Competitive Business Conditions.
We are subject to competition from a number of companies who have
considerably greater experience, engineering capability, and
financial resources than we have. We compete with numerous companies
involved in irradiation of blood including small and large
businesses. There are several companies producing radiation sources
that provide the same product functions. Several of these
competitors are substantially better funded by established and
ongoing relationships with many of the companies and organizations
that we will seek as customers. One factor that differentiates our
product from that of our competitors is our departure from a
radioactive source within our products. Most competitors which
produce irradiation devices do so through the utilization of some
form of high-energy source, the presence of which gives rise to
various radiation, safety and cost issues common among our
competition.
The markets in which we operate are characterized by significant
technological change, evolving industry standards and new product
introductions. Our competitors can be expected to continue to
improve the design and performance of their products and to
introduce new products with competitive price and performance
characteristics. There can be no assurance that we will have
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sufficient resources to adopt to technological change. If our
products or technologies become uncompetitive or obsolete, it will
have a material adverse effect on our operations.
(5) Sources and Availability of Raw Materials.
We are able to obtain the materials for the manufacturing of our
products from various suppliers, and we do not anticipate any
shortage of raw materials needed for the manufacturing of our
products.
(6) Dependence on Certain Customers.
We do not believe that we are dependent upon any single material
customer.
(7) Intellectual Property.
We have applied for a patent on the RS 3000 Unit (Serial Number
09,383,228). There can be no assurance that patent protection for
the RS 3000 will be granted. Further, there can be no assurance that
if granted the patent for the RS 3000 or other patents applied for
in the future will afford protection from material infringement or
that such patents will not be challenged.
There also can be no assurance that our technology will not infringe
upon the patents of others. In the event that any such infringement
claim is successful, there can be no assurance that we will be able
to negotiate with the patent holder for a license, in which case we
could be prevented from utilizing the subject matter claimed by such
patent. In addition, there can be no assurance that we will be able
to redesign our products to avoid infringement. Our inability to
utilize the subject matter of patents claimed by others, or to
redesign our products to avoid infringement, could have a material
adverse effect on our business.
Mr. Kirk, our founder and President, developed the technologies used
in our current products. There is currently an exclusive licensing
agreement between our Company and Mr Kirk. Under the terms of this
agreement, Randol Kirk is to be paid a five percent (5%) royalty
based upon the total net selling price of the licensed technology
and licensed products made, used or sold by the Company. Licensed
technology and products consists of our irradiation devices. This
agreement began on September 15, 1999 and is for a term of ten (10)
years. The agreement is renewable at the option of the Company.
Under the agreement, royalties are to be paid monthly, within ten
(10) days after the end of the month in which they become due. Upon
our default of payment which we fail to cure within thirty (30) days
of notice, Mr. Kirk may terminate the licensing agreement. If the
amount of royalty received by Mr. Kirk is less than $12,000 per
fiscal quarter, including company compensation, the agreement
between the parties will be terminated. As such, the rights to the
licensed technology would revert back to Mr. Kirk. Should this
occur, the operations of the Company could be adversely affected.
As of the date of this registration statement, we have no
trademarks, franchises, concessions, or labor contracts.
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(8)-(9) Government Approvals and Government Regulation.
Our two units comply with Federal Regulations 21 CFR 1020.40 and the
NCRP Report No. 88, ANSI No. 1975, 1978, and 1979A. These
regulations require that no radiation can escape the cabinet and
that radiation production stops if the door is accidentally opened.
Our services, medical products and manufacturing activities are
subject to extensive and rigorous government regulation, including
the provisions of the Federal Food, Drug and Cosmetic Act.
Commercial distribution in certain foreign countries is also subject
to government regulations. The process of obtaining required
regulatory approvals can be lengthy, expensive and uncertain.
Moreover, regulatory approvals, if granted, may include significant
limitations on the indicated uses for which a product may be
marketed. The Food and Drug Administration (the "FDA") enforces
regulations prohibiting marketing without compliance with the
pre-market approval provisions of medical devices. A Section 510(k)
application is required in order to market a new or modified medical
device. If specifically required by the FDA, a pre-market approval
may be necessary. The FDA review process typically requires
extensive procedures pertaining to the safety and efficacy of new
products, which may delay or hinder a product's timely entry into
the marketplace.
The FDA also regulates the content of advertising and marketing
materials relating to medical devices. There can be no assurance
that our advertising and marketing materials related to our products
are and will be in compliance with such regulations. We are also
subject to other federal, state, local and foreign laws, regulations
and recommendations relating to safe working conditions, laboratory
and manufacturing practices. Failure to comply with applicable
regulatory requirements can result in, among other things, fines,
suspensions of approvals, seizures or recalls of products, operating
restrictions and criminal prosecutions. Furthermore, changes in
existing regulations or adoption of new regulations could affect the
timing of, or prevent us from obtaining, future regulatory
approvals. The effect of government regulation may be to delay us
for a considerable period of time or to prevent the marketing and
full commercialization of future products or services that we may
develop and/or to impose costly requirements on us. There can also
be no assurance that additional regulations will not be adopted or
current regulations will not be amended in such a manner as to
materially adversely affect our operations.
Our irradiation products for blood units are used exclusively in the
health care industry, which is highly regulated. The health care
industry in certain markets for our products, including the United
States, has experienced significant pressure to reduce costs, which
has led in some jurisdictions to substantial reorganizations and
consolidations of health care providers or payers. Cost reduction
efforts by our customers may adversely affect the potential markets
for our products and services. It is also possible that legislation
could be adopted in any of these jurisdictions which could increase
such pressures or which could otherwise result in a modification of
the private or public health care system or both or impose
limitations on our ability to market our products in any such
jurisdiction. Any such event or condition could have an adverse
impact on our business, financial condition or results of
operations.
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The manufacture and use of irradiation equipment is highly
regulated, and there can be no assurance that we will be able to
comply with existing or future regulations or that the regulatory
environment in which we operate will not change significantly and
thus adversely effect our business and financial condition.
Every state imposes licensing requirements on individual
technicians, other equipment operators and the facilities that
utilize irradiation equipment. We cannot predict with any level of
certainty how these licensing requirements will affect our
operations.
We believe healthcare and food-processing regulations will continue
to change; therefore, we will regularly monitor developments in
healthcare, agricultural and food processing laws. We expect to
modify our operations from time to time as the business and
regulatory environment changes. There can be no assurance that we
will be able to successfully address changes in the regulatory
environment and, as such, our operations could be negatively
impacted.
Any of our products may be subject to recall for unforeseen reasons.
The medical device industry has been characterized by significant
malpractice litigation. As a result, we face a risk of exposure to
product liability, errors and omissions or other claims in the event
that the use of our X-ray equipment, components, accessories or
related services or other future potential products is alleged to
have resulted in a false diagnosis. There can be no assurance that
we will avoid significant liability. Currently, we have no insurance
coverage in place for such liabilities. Further, our assets are
insufficient to compensate for any such claim. As such, any claim
relating to malpractice litigation or recall could adversely affect
our business.
There also can be no assurance that we will be able to obtain
adequate insurance coverage or that, if obtained, such coverage will
continue to be available at an acceptable cost, if at all.
Consequently, such claims could have a material adverse effect on
our business or our financial condition.
(10) Research and Development.
In our past two fiscal years, we have spent approximately $185,700
on product research and development. We do not anticipate that this
cost will be borne directly by the customers.
(11) Compliance with Environmental Laws.
We are currently not subject to compliance with any environmental
laws, to the best knowledge of our management, and we do not
anticipate any significant costs in maintaining compliance in the
future.
(12) Employees.
As of the date of this registration statement, we have five total
employees. Of these, two are full time and three are part-time. None
of our employees are members of a union. We believe that our
relationship with our employees is favorable. We do not intend to
add additional employees in the foreseeable future, but additional
employees may be added if our products gain market acceptance.
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Item 2. Plan of Operation
Management expects that we will enter our operational phase during the next
twelve months with our first product, the RS 3000 Blood Irradiator. We delivered
our first unit, which has been used commercially since August 1999. Our second
unit was delivered in September 1999. These units are to be used by medical
facilities for blood irradiation. Additionally, we are negotiating on an
existing order for eight units to be delivered over the next twelve months. We
currently only have one unit being used successfully by a customer. Although
there have been no significant technical problems to date, management cannot
provide assurance that none will arise in the future. We have tested the product
and had an independent laboratory test the product, but should any substantial
technical difficulties be discovered, management can make no assurances that we
will be able to remedy such in a manner that guarantees commercial success of
the product.
We have developed another product using the same technology as the RS 3000 Blood
Irradiator for use in research laboratories and have delivered one unit to date.
This product is the RS 2000 Biological Irradiator.
We do not have a long history of either of these units being used commercially,
the potential success of this product is not assured.
It is expected that these products will remain in the development stage for the
next six to twelve months. Funding for such products will be dependent on the
commercial success of our developed products, upon which we expect to
concentrate our efforts.
Our ability to satisfy infrastructure requirements in order to operate as a
going concern will be dependent on the success of the RS 2000 and RS 3000 over
the next twelve months and our ability to raise capital if product sales and
cash collections from such sales are not sufficient. Management believes we will
have to raise capital over the next twelve months to satisfy our working capital
requirements and development costs. We expect to add employees and incur
resultant administrative costs associated with a more substantial infrastructure
in order to support the production and sale of our existing products and the
development of others. This will necessitate the need for capital. In this
regard, management's plan is to seek both private and institutional funds. In
September, our affiliates funded approximately $60,000 for our operations;
management may utilize this means of raising capital again in the near future,
if necessary. Collections from the sale of the first unit and successful
acceptance by the customer of the second unit in September 1999 are expected to
mitigate the need for substantial additional capital, however no assurances that
these expectations are correct can be made.
Over the next twelve months, we expect to incur approximately $100,000 in
capital expenditures, including test and assembly equipment for our products as
well as office furnishings and equipment. Because management believes we are
entering our operational phase, our number of employees is expected to increase
by approximately three to five people. We utilize outsourcing for much of our
manufacture and assembly, and we will require sales and administrative
assistance.
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Item 3. Description of Property
Our headquarters are located at our central office/engineering facilities at 475
Ramblewood Drive, Suite 207, Coral Springs, Florida 33071. The facility is
approximately five hundred (500) square feet of office space. We lease this
space on a month-to-month basis at a rent of $560.00 per month. We believe that
this space is sufficient for our needs at this time.
Item 4. Security Ownership of Certain Beneficial Owners and Management
The table below sets forth information with respect to the beneficial ownership
of the common stock by (a) each person known by us to be the beneficial owner of
five percent or more of the outstanding common stock, and (b) all executive
officers and directors both individually and as a group, as of October 5, 1999.
Unless otherwise indicated, we believe that the beneficial owner has sole voting
and investment power over such shares.
(a) Security Ownership of Certain Beneficial Owners
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Title Of Class Name and Address of Number of Shares Percentage Ownership
Beneficial Owner Beneficially Owned of Class
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Richard Adams 258,334 10.16%
475 Ramblewood Drive, Ste. 207
Coral Springs, Florida 33071
- -----------------------------------------------------------------------------------------------
Common Stock Will Hartman 318,333 12.52%
475 Ramblewood Drive, Ste. 207
Coral Springs, Florida 33071
- -----------------------------------------------------------------------------------------------
Common Stock Adrian Kesala 277,778 10.92%
475 Ramblewood Drive, Ste. 207
Coral Springs, Florida 33071
- -----------------------------------------------------------------------------------------------
Common Stock Randy Kirk 801,451 31.51%
475 Ramblewood Drive, Ste. 207
Coral Springs, Florida 33071
- -----------------------------------------------------------------------------------------------
Common Stock Robert Munson 235,334 9.25%
475 Ramblewood Drive, Ste. 207
Coral Springs, Florida 33071
- -----------------------------------------------------------------------------------------------
</TABLE>
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(b) Security Ownership of Management
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Title Of Class Name and Address of Number of Shares Percentage Ownership
Beneficial Owner Beneficially Owned of Class
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Common Stock Richard Adams 258,334 10.16%
475 Ramblewood Drive, Ste. 207
Coral Springs, Florida 33071
- -----------------------------------------------------------------------------------------------
Common Stock Will Hartman 318,333 12.52%
475 Ramblewood Drive, Ste. 207
Coral Springs, Florida 33071
- -----------------------------------------------------------------------------------------------
Common Stock Adrian Kesala 277,778 10.92%
475 Ramblewood Drive, Ste. 207
Coral Springs, Florida 33071
- -----------------------------------------------------------------------------------------------
Common Stock Randy Kirk 801,451 31.51%
475 Ramblewood Drive, Ste. 207
Coral Springs, Florida 33071
- -----------------------------------------------------------------------------------------------
Common Stock Robert Munson 235,334 9.25%
475 Ramblewood Drive, Ste. 207
Coral Springs, Florida 33071
- -----------------------------------------------------------------------------------------------
Common Stock Total Officers & Directors (5) 1,891,230 64.25%
- -----------------------------------------------------------------------------------------------
</TABLE>
(c) Change in Control
There are no arrangements, which may result in a change in control of the
Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons
(a) Directors and Executive Officers
The following sets forth the names and ages of our officers and directors.
Our directors are elected annually by the shareholders, and the officers
are appointed annually by the board of directors.
- --------------------------------------------------------------------------------
Name Position Age Term
- --------------------------------------------------------------------------------
Richard Adams Director 53 Annual
- --------------------------------------------------------------------------------
Will Hartman Director 39 Annual
- --------------------------------------------------------------------------------
Adrian Kesala Director 55 Annual
- --------------------------------------------------------------------------------
Randol Kirk CEO, President,
Director 51 Annual
- --------------------------------------------------------------------------------
Robert Munson Secretary & Director 57 Annual
- --------------------------------------------------------------------------------
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Richard Adams.
Mr. Adams has served as a Director of the Company since December 24, 1998.
He holds a B.A. from Michigan State University. Mr. Adams has had a long
and distinguished career in management within the healthcare and medical
field, during which, he co-founded Epsilon Medical Corporation with Mr.
Kirk in 1991, as well as aided in the development of the (D.I.A.) Scan
Portable Fluoroscopy Unit.
From 1978 to the present, Mr. Adams was the owner and President of
LifeCare Imaging International, Ltd, a fifteen (15) year old manufacturer
of mobile medical suites.
Will Hartman.
William Hartman, a CPA, has served as a Director of the Company since
March 1999. Mr. Hartman is a CPA and holds Bachelor of Science, Master of
Business Administration and Master of Accounting Degrees from Miami
University in Oxford, Ohio. Mr. Hartman has served in consulting and
executive financial positions and began his career with Price Waterhouse
in 1984. From April 1994 to June 1995, Mr. Hartman served as chief
financial officer of Jansko, Inc., a furniture manufacturing company. From
July 1995 to October 1996, Mr. Hartman served as vice-president of finance
and administration for Turbo Power, Inc., an aircraft engine overhaul
facility. From October 1996 to June 1998, Mr. Hartman served as a
financial advisor to Custom Air Support Holdings, Inc., a holding company
for aviation investments, and from April 1998 to June 1998 served as
President of an affiliated freight airline, Custom Air Transport, Inc.
From August 1998 to May 1999, Mr. Hartman was the senior manager of
corporate reporting for Neff Corp., an industrial equipment leasing
company listed on the NYSE. Mr. Hartman is presently a financial advisor
with ecom ecom.com, Inc., and has been with them since June 1999. Ecom
ecom.com, Inc. is a company in the sports leisure and internet commerce
industries.
Adrian Kesala.
Mr. Kesala has been a director of the Company since December 24, 1998. Mr.
Kesala served as the Senior Staff Radiologist at the
Columbus-Cuneo-Cabrini Medical Center in Chicago, Illinois from 1978 to
1985. He also worked as an Assistant professor of Radiology at
Northwestern University in Chicago, Illinois from 1978 to 1990, as well as
the Director of Radiology at Swedish Covenant Hospital in Chicago,
Illinois from 1985 to 1990. Presently, Mr. Kasala is in the active
practice of radiology at Resurrection Medical Center, Chicago, Illinois,
where he has been since 1991.
Randol Kirk.
Mr. Randol Kirk is the founder of Rad Source and has served as President
of the Company since December 24, 1998. Mr. Kirk received his Bachelor of
Arts from the University of Iowa and a Masters in Business Administration
from DePaul University. Mr. Kirk's professional career as an entrepreneur
in the healthcare and diagnostic imaging field has spanned over twenty
-five (25) years.
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Prior to founding Rad Source, Mr. Kirk was the co-founder and President of
Epsilon Medical Corporation, which provided diagnostic evaluations for
stroke patients in skilled nursing facilities. He worked in this capacity
from 1991 to 1995. In 1996 Mr. Kirk founded Rad Source, Inc. Mr. Kirk's
most recent efforts have been directed towards developing and building our
RS 2000 and RS 3000 irradiators.
Robert Munson.
Robert Munson has served as our Director of Marketing since December 24,
1998. Mr. Munson began his career with Medical Supply Company ("MSC") of
Florida in 1965, where he rose to Vice President and eventually partner.
After the sale of MSC, he was the Vice President of Sales and Marketing
for Medical Resources International, which manufactured and distributed
medical gloves, from 1988 to 1991.
(b) Significant Employees.
There are no employees expected to make a significant contribution to the
business that are not mentioned above.
(c) Family Relationships.
There are no family relationships among directors, executive officers, or
persons nominated for such positions.
(d) Involvement in Certain Legal Proceedings.
From April of 1994 to June 1995, Will Hartman our Director, served as
Chief Financial Officer for Jansko Inc. which entered Chapter 7 bankruptcy
May 1, 1996 in the Southern District of Florida.
Other than the aforementioned, during the past five years there have been
no bankruptcies, criminal proceedings, or other legal proceedings, which
would be material to the evaluation of the ability or integrity of any
director, executive officer, or any person, nominated for such positions
in the Company.
Item 6. Executive Compensation
(a) General.
The following tables and notes present, for the two fiscal years ended
September 30, 1999, the compensation paid by the Company to the Company's
chief executive officers:
14
<PAGE>
(b) Summary Compensation Table
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Long Term Compensation
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Awards Payouts
- ------------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- ------------------------------------------------------------------------------------------------------------------------------------
Restricted Securities
Name and Other Annual Stock Underlying LTIP All Other
Principle Position Year Salary Bonus Compensation Award(s) Options/SARs Payouts Compensation
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Richard Adams, 1999 5000 0 0 $0 100,000 (1) 0 0
Secretary 1998 0 0 0 $0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Will Hartman, 1999 6250 0 0 $15,583 100,000 (1) 0 0
Director 1998 0 0 0 $0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Adrian Kesala, 1999 0 0 0 $0 100,000 (1) 0 0
Director 1998 0 0 0 $0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Randol Kirk, 1999 20,000 0 0 $74,800 100,000 (1) 0 0
President, CEO 1998 48,000 0 0 $0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Robert Munson, 1999 10,000 0 0 $0 100,000 (1) 0 0
Director 1998 0 0 0 $0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) These options are vested and exercisable by the holder until September 30,
2002
(c) Options/SAR Grants Table
--------------------------------------------------------------------------
Number of
Name/Position Underlying % of Total Exercise Expiration
Securities Options Granted Price Date
--------------------------------------------------------------------------
Richard Adams,
Secretary 100,000 20% $0.20 9/15/02
--------------------------------------------------------------------------
Will Hartman,
Director 100,000 20% $0.20 9/15/02
--------------------------------------------------------------------------
Adrian Kesala,
Director 100,000 20% $0.20 9/15/02
--------------------------------------------------------------------------
Randol Kirk,
President, CEO 100,000 20% $0.20 9/15/02
--------------------------------------------------------------------------
Robert Munson,
Director 100,000 20% $0.20 9/15/02
--------------------------------------------------------------------------
15
<PAGE>
Item 7. Certain Relationships and Related Transactions
On September 15, 1999, we entered into an employment agreement with Mr. Randol
Kirk for him to provide management, product research and development, and other
activities within his field of expertise to the Company. This agreement is for a
term of three years from the date of execution, and provides for a salary of
$120,000 for the first year of employment, $140,000 for the second year of
employment and $150,000 for the third year of employment under the agreement. In
addition, the agreement requires that we give the employee an option to purchase
100,000 shares of our common stock at $0.20 per share and 400,000 share of
restricted common stock.
This agreement is terminable upon mutual agreement of the parties, action by the
Board of Directors in the event of illness or disability or material default or
breach of the agreement.
There is currently an exclusive licensing agreement between us and Mr. Randol
Kirk, our founder and President. Under the terms of this agreement, Randol Kirk
is to be paid a five percent (5%) royalty based upon the total net selling price
of the licensed technology and licensed products made, used or sold by the
Company. Licensed technology and products consists of our irradiation devices.
This agreement began on September 15, 1999 and is for a term of ten (10) years.
The agreement is renewable by the Company. Under the agreement, royalties are to
be paid monthly, within ten (10) days after the end of the month in which they
become due. Upon our default in making any payment not cured within thirty (30)
days of notice, Mr. Kirk may terminate the licensing agreement. If the amount of
royalty received by Mr. Kirk is less than $12,000 per fiscal quarter, including
company compensation, the agreement between the parties will be terminated. As
such, the rights to the licensed technology would revert back to Mr. Kirk.
Should this occur, the operations of the Company could be adversely affected.
Other than the aforementioned, we do not intend to enter into any transactions
with our beneficial owners. We are not a subsidiary of any parent company.
Item 8. Description of Securities
Common Stock.
In General. We are authorized to issue 50,000,000 shares of common stock, par
value $.001 per share, of which 2,443,373 shares were issued and outstanding as
of October 1, 1999. All of the issued and outstanding common stock is fully paid
and non-assessable.
Voting. Each share of our common stock entitles the holder thereof to one vote
in the election of directors and in all other matters upon which stockholders
are entitled to vote. The holders of shares of common stock do not have
cumulative voting rights, which means that the holders of more than 50% of the
outstanding shares voting for the election of directors can elect all of the
directors to be elected, if they so choose. In such event, the holders of the
remaining shares will not be able to elect any of our directors.
16
<PAGE>
Dividends. Each share of common stock entitles the holder thereof to receive
cash dividends as the Board of Directors may declare from funds legally
available therefore. However, we do not intend to declare any dividend on our
common stock in the foreseeable future.
Rights. There are no preemptive rights with respect to the common stock. Upon
liquidation, dissolution or winding up of the affairs of the Company, and after
payment of creditors, the assets legally available for distribution will be
divided ratably on a share-for-share basis among the holders of the outstanding
shares of common stock.
17
<PAGE>
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters
(a) Market Information.
The Company's Common Stock is traded on the NASDAQ Over the Counter
Bulletin Board ("OTCBB") under the symbol IRAD. There is no active trading
market for the Common Stock. The following bid quotations have been
reported for the period beginning March 16, 1999, the date of our initial
quotation, and ending September 30, 1999:
--------------------------------------------------------------------------
Bid Quotation
--------------------------------------------------------------------------
Quarterly Period High Low
--------------------------------------------------------------------------
March 16, 1999 - March 31, 1999 $5.125 $4.25
--------------------------------------------------------------------------
April 1, 1999 - June 30, 1999 $4.75 $2.25
--------------------------------------------------------------------------
July 1, 1999 - September 30, 1999* $3.625 $0.125
--------------------------------------------------------------------------
* Reflects 1:3 reverse split on September 9, 1999.
Such quotations reflect inter-dealer prices, without retail mark-up,
markdown or commission. Such quotes are not necessarily representative of
actual transactions or of the value of our securities, and are in all
likelihood not based upon any recognized criteria of securities valuation
as used in the investment banking community.
We currently have seven (7) market makers for our common stock. There is
no assurance that an active trading market will develop which will provide
liquidity for our existing shareholders or for persons who may acquire
common stock through the exercise of warrants.
(b) Holders
As of October 1, 1999 there were approximately 74 holders of record of our
2,443,373 shares of common stock outstanding. Of these 2,443,373 shares,
1,967,649 shares are restricted securities within the meaning of Rule
144(a)(3) promulgated under the Securities Act of 1933, as amended,
because such shares were issued and sold by the Company in private
transactions not involving a public offering. Certain of the shares of
common stock are held in "street" name and may, therefore, be held by
several beneficial owners. Our transfer agent is Interwest Stock Transfer,
P.O. Box 17136, Salt Lake City, Utah 84117.
No prediction can be made as to the effect, if any, that future sales of
shares of common stock or the availability of common stock for future sale
will have on the market price of the common stock prevailing
18
<PAGE>
from time-to-time. Sales of substantial amounts of common stock on the
public market could adversely affect the prevailing market price of the
common stock.
(c) Dividends
We have not paid a cash dividend on the common stock since inception. The
payment of dividends may be made at the discretion of our Board of
Directors and will depend upon, among other things, our operations, our
capital requirements and our overall financial condition. As of the date
of this registration statement, we have no intention to declare dividends.
Item 2. Legal Proceedings
We are currently unaware of any pending legal proceeding or any proceeding
contemplated by a governmental authority in which we may be involved.
Item 3. Changes In and Disagreements With Accountants
We have not had any resignation or dismissal of our principal independent
accountants. As of the date of this registration statement, Sweeney, Gates & Co.
located at 2691 Oakland Park Boulevard, Suite 302, Fort Lauderdale, Florida
33306 serve as our independent accountants and have prepared the audited
statements included as exhibits hereto.
Item 4. Recent Sales of Unregistered Securities
Pursuant to the Share Exchange dated December 31, 1998 between Rad Source and
the Company, we issued 759,422 (Post-split) shares of our common stock. Of the
shares issued in the exchange 69,326 (Post-split) shares were issued with a
restrictive legend relying upon the exemption provided in section 4(2) of the
Securities Act of 1933, as amended ("the Act")
Of the shares issued in the exchange, we issued the following shares in reliance
upon Rule 504 of Regulation D of the Act: (i) 16,667 (Post-split) shares were
issued for legal services rendered to Rad Source in 1998; and (i) or 8,778
(Post-split) were issued to prior shareholders of Rad Source. At the closing of
this Share Exchange we issued an additional 333,333 (Post-split) shares of our
common stock to Capital International Holdings Inc. and its affiliates in
consideration for various services rendered to Rad Source pursuant to an
agreement between Capital International Holdings Inc. and Rad Source dated
October 20, 1998. We relied upon the following facts in determining that Rule
504 was available: (a) We were not subject to the reporting requirements of
Section 13 or 15 (d) of the Exchange Act; (b) we were not a development stage
Company with no specific business plan nor a company whose business plan was to
merge with an unidentified private entity; (c) the aggregate offering price did
not exceed $1,000,000.
All references to our shares contained in this registration reflect the stock
split of September 9, 1999, unless otherwise indicated. In March of 1999, we
issued 113,333 (Post-split) or 340,000 (Pre-split) shares of our common stock at
a price of $6.00 per share (Post-split) or ($2.00 per share Pre-split) raising
total proceeds of $680,000. We relied upon the following facts in determining
that Rule 504 was available: (a) We were not subject to the reporting
requirements of Section 13 or 15 (d) of the Exchange Act; (b) we were not a
development stage Company nor a company whose business plan was to merge with an
unidentified private entity; (c) the aggregate offering price did
19
<PAGE>
not exceed $1,000,000. A form D was filed. From the offering proceeds, we paid
commissions in the amount of $102,000 to our placement agent, Capital
International Securities, Inc. and their affiliates.
We issued a total of 1,183,333 restricted shares of our common stock in
September of 1999 in reliance upon Section 4(2) of the Securities Act of 1933.
Of these, 50,000 shares were issued for legal services rendered to the Company,
150,000 shares were issued to Consultants for services rendered to the Company,
400,000 shares were issued to Randol Kirk, our President and Director for
services rendered to the Company, and 83,333 shares were issued to William
Hartman, our Director, for services rendered to the Company. In addition,
500,000 shares were sold at $0.20 per share, of which 375,000 were sold to
Officers and Directors of the Company as follows:
William Hartman, Director 125,000
Robert Munson, Director 50,000
Adrian Kesala, Director 125,000
Richard Adams, Director & Secretary 75,000
In September of 1999 we issued 300,000 options to various consultants of the
Company to purchase shares of our common stock at the price of 0.20 per share.
Additionally, we issued 100,000 options to each of our five officers and
Directors (500,000 options total) at an exercise price of $0.20 per share. The
options were granted in reliance upon section 4(2) of the Securities Act of
1933, as amended.
Item 5. Indemnification of Directors and Officers
Our bylaws provide that no officer or director of the Company shall be
personally liable to the Company or its shareholders for damages for breach of
any duty owned to the Company or its shareholders to the fullest extent
permitted by law. In addition, the Company shall have the power to undertake to
indemnify the officers and directors of the Company against any contingency or
peril as may be determined to be in the best interest of the Company.
Florida law provides that a director shall have no personal liability for any
statement, vote, decision or failure to act, regarding corporate management or
policy by a director, unless the director breached or failed to perform the
duties of a director. A company may also protect its officers and directors from
expenses associated with litigation arising from or related to their duties,
except for violations of criminal law, transactions involving improper benefit
or willful misconduct. In addition, we shall have the power, by our by-laws or
in any resolution of our stockholders or directors, to undertake to indemnify
the officers and directors of ours against any contingency or peril as may be
determined to be in our best interest and in conjunction therewith, to procure,
at our expense, policies of insurance.
20
<PAGE>
PART F/S
RAD SOURCE TECHNOLOGIES, INC.
FORMERLY COMPUTER VENDING, INC.,
(a development stage company)
FINANCIAL STATEMENTS
AND
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>
RAD SOURCE TECHNOLOGIES, INC.
FORMERLY COMPUTER VENDING, INC.,
(a development stage company)
FINANCIAL STATEMENTS
TABLE OF CONTENTS
Page
Report of Independent Certified Public Accountants F-1
Balance Sheets as of September 30, 1998 and
August 31, 1999 (unaudited) F-2
Statements of Operations for the year ended September 30, 1998, and
October 11, 1996 (inception) to September 30, 1997, and for
the eleven months ended August 31, 1999 and 1998 (unaudited) F-3
Statement of Changes in Stockholders' Deficit for the period October
11, 1996 (inception) to September 30, 1998 and for the eleven
months ended August 31, 1999 (unaudited) F-4
Statements of Cash Flows for the year ended September 30, 1998, and
October 11, 1996 (inception) to September 30, 1997, and for the
eleven months ended August 31, 1999 and 1998 (unaudited) F-5
Notes to Financial Statements for the year ended September 30, 1998,
and October 11, 1996 (inception) to September 30, 1997, and for
the eleven months ended August 31, 1999 and 1998 (unaudited) F-7
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Rad Source Technologies, Inc.,
formerly Computer Vending, Inc.
We have audited the balance sheet of Rad Source Technologies, Inc., formerly
Computer Vending, Inc. (a development stage company) as of September 30, 1998,
and the related statements of operations, changes in stockholders' deficit, and
cash flows for the year ended September 30, 1998, and for the period October 11,
1996 (date of inception) to September 30, 1997, and for the period October 11,
1996 (date of inception) to September 30, 1998. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Rad Source Technologies, Inc.,
formerly Computer Vending, Inc., (a development stage company) as of September
30, 1998, and the results of its operations and cash flows for the year ended
September 30, 1998, and for the period October 11, 1996 (date of inception) to
September 30, 1997, and for the period October 11, 1996 to September 30, 1998,
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has been in the development stage since
inception on October 11, 1996, and has suffered losses from operations and has a
net capital deficiency that raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 3. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Sweeney, Gates & Co.
/s/ Sweeney, Gates & Co.
January 29, 1999
Fort Lauderdale, Florida
F-1
<PAGE>
RAD SOURCE TECHNOLOGIES, INC.
(a development stage company)
BALANCE SHEETS
August 31, September 30,
1999 1998
----------- ------------
(Unaudited)
ASSETS
Current assets:
Cash $ 15,656 $ 2,237
Accounts receivable 65,000 --
Inventories 36,959 36,959
----------- -----------
Total current assets 117,615 39,196
Other assets 500 500
----------- -----------
Total assets $ 118,115 $ 39,696
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Notes payable 45,300 100,200
Accounts payable 282,962 43,624
Accrued expenses 141,851 166,727
Customer deposits 17,800 --
Unsecured advances -- 54,500
Due to stockholders 10,212 5,100
----------- -----------
Total current liabilities 498,125 370,151
----------- -----------
Stockholders' deficit
Preferred stock, par value $.0001; 10,000,000
shares authorized; no shares issued or
outstanding -- --
Common stock, par value $.001; 100,000,000
shares authorized; 1,260,040 and 759,422
shares, respectively, issued and outstanding 1,260 759
Additional paid-in capital 4,088,621 116
Deficit accumulated during development stage (4,469,891) (331,330)
----------- -----------
Total stockholders' deficit (380,010) (330,455)
----------- -----------
$ 118,115 $ 39,696
=========== ===========
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
RAD SOURCE TECHNOLOGIES, INC.
(a development stage company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
October 11,
1996 October 11, 1996 (inception) to
Year ended (inception) to -------------------------------
Eleven months ended August 31, September 30 September 30 August 31, September 30,
1999 1998 1998 1997 1999 1998
----------- ----------- ----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Sales $ 65,000 $ -- -- $ -- $ 65,000 $ --
Cost of sales 53,150 -- -- -- 53,150 --
----------- ----------- ----------- ----------- ----------- -----------
Gross profit 11,850 -- -- -- 11,850 --
----------- ----------- ----------- ----------- ----------- -----------
Expenses:
Research and development 185,170 10,673 10,673 16,689 212,532 27,362
Issuance of stock for services 3,460,494 -- -- -- 3,460,494 --
Selling, general and administrative 392,244 210,352 224,874 62,595 679,713 287,469
----------- ----------- ----------- ----------- ----------- -----------
Total expenses 4,037,908 221,025 235,547 79,284 4,352,739 314,831
----------- ----------- ----------- ----------- ----------- -----------
Loss before other income (expense) (4,026,058) (221,025) (235,547) (79,284) (4,340,889) (314,831)
Other income (expense):
Other expense (100,000) -- -- -- (100,000) --
Interest (12,503) (14,206) (15,056) (1,443) (29,002) (16,499)
----------- ----------- ----------- ----------- ----------- -----------
Other expense (112,503) (14,206) (15,056) (1,443) (129,002) (16,499)
----------- ----------- ----------- ----------- ----------- -----------
Net loss $(4,138,561) $ (235,231) $ (250,603) $ (80,727) $(4,469,891) $ (331,330)
=========== =========== =========== =========== =========== ===========
Earnings per share (basic and diluted): $ (3.92) $ (0.31) $ (0.33) $ (0.11)
=========== =========== =========== ===========
Weighted average shares outstanding: 1,055,903 759,422 759,422 759,422
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
RAD SOURCE TECHNOLOGIES, INC.
(a development stage company)
STATEMENTS OF STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
Deficit
accumulated
Preferred Stock Common Stock Additional during
------------------- -------------------- paid-in development
Shares Par value Shares Par value capital stage Total
-------- --------- --------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of founders stock -- $ -- 759,422 $ 759 $ 116 $ -- $ 875
Net loss -- -- -- -- -- (80,727) (80,727)
-------- --------- --------- --------- ----------- ----------- -----------
Balance, September 30, 1997 -- -- 759,422 759 116 (80,727) (79,852)
Net loss -- -- -- -- -- (250,603) (250,603)
-------- --------- --------- --------- ----------- ----------- -----------
Balance, September 30, 1998 -- -- 759,422 759 116 (331,330) (330,455)
Acquision of Computer Vending, Inc. -- -- 1,800 2 -- -- 2
Sale of common stock -- -- 113,333 114 573,896 -- 574,010
Issuance of stock for unsecured advances
net of founders shares contributed to the
Company -- -- 2,111 2 54,498 -- 54,500
Issuance of stock for services -- -- 383,374 383 2,323,617 -- 2,324,000
Services paid by stock contributed by
founder -- -- -- -- 1,136,494 -- 1,136,494
Net loss for the eleven months ended
August 31, 1999 (unaudited) -- -- -- -- -- (4,138,561) (4,138,561)
-------- --------- --------- --------- ----------- ----------- -----------
Balance, August 31, 1999 (unaudited) -- $ -- 1,260,040 $ 1,260 $ 4,088,621 $(4,469,891) $ (380,010)
======== ========= ========= ========= =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
RAD SOURCE TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
October 11, October 11, 1996
Eleven months ended 1996 (inception) to
August 31, Year ended (inception) to -------------------------
------------------------ September 30, September 30, August 31, September 30,
1999 1998 1998 1997 1999 1998
---- ---- ---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Cash flow (used) by operating activities:
Net loss $(4,138,561) $ (235,231) $ (250,603) $ (80,727) $(4,469,891) $ (331,330)
Interest paid by issuing notes -- -- 6,400 -- 6,400 6,400
Issuance of stock for services 3,460,494 -- -- -- 3,460,494 --
Adjustments to reconcile net loss to net
cash used in operating activities:
Change in assets and liabilities:
Decrease (increase) in:
Accounts receivable (65,000) -- -- -- (65,000) --
Inventories -- -- -- (36,959) (36,959) (36,959)
Other assets -- -- -- (500) (500) (500)
Increase (decrease) in:
Accounts payable 239,338 (4,059) 3,387 40,237 282,962 43,624
Accrued expenses (24,876) 131,749 136,429 30,298 141,851 166,727
Customer deposits 17,800 -- -- -- 17,800 --
----------- ---------- ----------- ----------- ----------- -----------
Net cash provided (used) by operating
activities (510,805) (107,541) (104,387) (47,651) (662,843) (152,038)
----------- ---------- ----------- ----------- ----------- -----------
Cash flows provided from financing activities:
Issuance of common stock 628,512 -- -- -- 629,387 875
Loans from stockholders 5,112 -- -- 5,100 10,212 5,100
Unsecured advances (54,500) 49,500 54,500 -- -- 54,500
Proceeds from notes payable -- 65,400 65,400 41,900 107,300 107,300
Payments on notes payable (54,900) (13,500) (13,500) -- (68,400) (13,500)
----------- ---------- ----------- ----------- ----------- -----------
Net cash provided (used) by financing
activities 524,224 101,400 106,400 47,000 678,499 154,275
----------- ---------- ----------- ----------- ----------- -----------
Net increase (decrease) in cash 13,419 (6,141) 2,013 (651) 15,656 2,237
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
RAD SOURCE TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
October 11, 1996
1996 (inception) to
Eleven months ended August 31, Year ended (inception) to --------------------------
------------------------------ September 30, September 30, August 31, September 30,
1999 1998 1998 1997 1999 1998
---- ---- ---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Cash, beginning of period 2,237 224 224 -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Cash, end of period $ 15,656 $ (5,917) $ 2,237 $ (651) $ 15,656 $ 2,237
============ ============ ============ ============ ============ ============
Additional information:
Cash paid for interest $ 4,029 $ 1,100 $ 1,100 $ 1,100 $ 5,129 $ 1,100
============ ============ ============ ============ ============ ============
Income taxes paid during the year $ -- $ -- $ -- $ -- $ -- $ --
============ ============ ============ ============ ============ ============
</TABLE>
F-6
<PAGE>
RAD SOURCE TECHNOLOGIES, INC.,
FORMERLY COMPUTER VENDING, INC.,
(a development stage company)
NOTES TO FINANCIAL STATEMENTS FOR
OCTOBER 11, 1998 (INCEPTION) TO SEPTEMBER 30, 1997
AND FOR THE YEAR ENDED SEPTEMBER 30, 1998 AND FOR
THE ELEVEN MONTHS ENDED AUGUST 31, 1999 (UNAUDITED)
1. THE COMPANY AND BASIS OF PRESENTATON
Rad Source Technologies, Inc. (the "Company"), was incorporated in the State of
Florida on July 2, 1990, as Computer Vending, Inc. The Company had no assets,
liabilities or operations prior to merging on December 24, 1998 with Rad Source,
Inc. ("Rad Source"). Rad Source changed its name to Rad Source Technologies,
Inc. on December 28, 1998. The merger was accounted for as a reverse
acquisition, and accordingly, the financial statements of the Company are those
of Rad Source, Inc., since its inception on October 11, 1996. The stockholders
of Rad Source received 759,422 (or 2,278,267 pre-split) shares of common stock
of the Company in the merger. On September 9, 1999, the Company reverse split
the shares on a three for one basis. All shares and per share information has
retroactively reflected this split.
The primary business of the Company is to develop, patent, manufacture, market
and sell a new irradiation concept for food and medical irradiation. Revenues
will be generated from the sale of irradiation products.
The Company has been in the development stage since inception and its efforts
through August 31, 1999, have been principally devoted to organizational
activities, raising capital and to the acquisition of patents.
Unaudited interim financial statements - The accompanying financial statements
of the Company for the eleven months ended August 31, 1999 and 1998, are
unaudited, but, in the opinion of management, reflect the adjustments, all of
which are of a normal recurring nature, necessary for a fair presentation of
such financial statements in accordance with generally accepted accounting
principles. The results of operations for an interim period are not necessarily
indicative of the results for a full year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounts receivable - The Company considers accounts receivable to be fully
collectible; accordingly, no allowance for doubtful accounts is required. If an
amount becomes uncollectable, an expense is charged to operations.
Inventories - Inventories are carried at cost.
Research and development expenses - Research and development expenses are
charged to expenses as incurred.
Income taxes - The Company accounts for income taxes on an asset and liability
approach to financial accounting. Deferred income tax assets and liabilities are
computed for the difference between the financial statement and tax basis of
assets and liabilities that will result in taxable or deductible amounts in the
future, based on enacted tax laws and rates applicable to the periods in which
the differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized. Income tax expense is the tax payable or refundable for the
period, plus or minus the change during the period in deferred tax assets and
liabilities.
F-7
<PAGE>
RAD SOURCE TECHNOLOGIES, INC.,
FORMERLY COMPUTER VENDING, INC.,
(a development stage company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income (loss) per share - The Company accounts for earnings per share according
to Financial Accounting Standards No. 128, "Earnings per Share" ("FAS 128"). FAS
128 requires presentation of basic and diluted earnings or loss per share.
Earnings or loss per share is computed by dividing net income or loss by the
weighted average number of shares outstanding during the period.
Use of estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amount of revenue and expenses during the reporting
period. Actual results could differ from those estimated.
Fair value of financial instruments - The fair value of the Company's financial
instruments approximate their carrying value.
3. UNCERTAINTY - GOING CONCERN
The Company's continued existence is dependent upon its ability to resolve its
liquidity problems, principally by obtaining equity and commencing profitable
operations. While pursuing capital, the Company must continue to operate on cash
flow generated from the loans of stockholders, if necessary. The Company
experienced a loss of $80,727 and $250,603 during 1997 and 1998, respectively,
and has a net deficiency in equity of $331,330 as of September 30, 1998. These
factors raise substantial doubt about the Company's ability to continue as a
going concern.
Management's plans in regards to this matter are to raise capital and commence
marketing and sales of units in an effort to generate positive cash flow. The
financial statements do not include any adjustment that might result from the
outcome of this uncertainty.
4. NOTES PAYABLE
Notes payable at August 31, 1999 and September 30,1998 consisted of the
following:
August 31, September 30,
1999 1998
---- ----
(Unaudited)
Unsecured demand notes payable, bearing
interest at 10%, guaranteed by the
President $ 45,300 $ 46,300
Unsecured demand note payable to a
director, bearing interest at 10% -- 11,500
Unse Unsecured demand note payable to a
limited partnership, interest prepaid
at 20%. Note is collaterized by
12,000 shares of common stock to be
issued only if the note is in default -- 42,400
------------ ------------
Total: $ 45,300 $ 100,200
============ ============
F-8
<PAGE>
RAD SOURCE TECHNOLOGIES, INC.,
FORMERLY COMPUTER VENDING, INC.,
(a development stage company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. SALE OF SECURITIES
In fiscal 1997, the Company issued to founders of Rad Source 8,750,000 shares of
common stock for $875. On the date of the merger with the Company, the founding
stockholders received 759,422 shares in the Company in exchange for their
initial shares in Rad Source.
On December 24, 1998 Rad Source purchased the Company for $100,000. The
transaction was accounted for as a reverse merger and, therefore, the financial
statements are those of Rad Source since its inception on October 11, 1996.
Because there were no assets, liabilities or operations, the $100,000 paid was
charged to other non-operating expense. In connection with this transaction,
1800 shares of common stock were retained by the prior stockholder.
In December 1998 and January 1999, the Company sold, pursuant to a private
placement, 113,333 shares of common stock for $574,010, net of expenses.
During the year ended September 30, 1998, individuals and a corporation advanced
the Company funds to purchase common stock. Since no shares have been issued at
the date of the report, the amounts have been classified as advances. During
fiscal year 1999, the Company issued 20,667 shares of stock for these advances
of which 18,556 shares were contributed by one of the founders, for a net of
2,111 new shares of common stock issued for the unsecured advances of $54,500.
The Company issued 366,707 shares of common stock for consulting services in the
amount of $2,260,000 and 10,000 shares for legal services in the amount of
$60,000. The charge to expense was based on the fair market value of the
securities issued at the time of issuance. In addition, the Company issued 6,667
shares in payment of legal fees for $4,000.
During the year, the founder contributed 198,416 of the original 759,422 shares
that were reissued in the share exchange in payment for consulting services
totaling $1,130,494, based on the fair market value of the securities at the
time of issue. In addition, the founder contributed 10,000 shares for legal fees
amounting to $6,000.
6. SUBSEQUENT EVENT
On September 16, 1999, the Company sold 500,000 shares of common stock for
$100,000 and 683,333 shares for services.
7. INCOME TAXES
The Company had available at September 30, 1998, a net operating loss
carry-forward for federal and state tax purposes of approximately $330,000,
which could be applied against taxable income in subsequent years through
September 30, 2012 to 2018. The tax effect of the net operating loss is
approximately $124,000, and a full valuation allowance has been recorded, since
realization is uncertain.
F-9
<PAGE>
RAD SOURCE TECHNOLOGIES, INC.,
FORMERLY COMPUTER VENDING, INC.,
(a development stage company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. LEASE COMMITMENTS
The Company entered into a vehicle lease on December 31, 1996 for a term of 39
months at $430 per month. The Company also assumed a lease for office space on
August 16, 1996 for a term of two years at $560 per month. The lease is
currently on a month to month basis. Future minimum lease payments under
noncancelable operating leases are:
Year ending September 30:
1999 $ 5,158
2000 2,579
-------
$ 7,737
=======
Rental expense from the vehicle and office leases charged to income for the year
ended September 30, 1998 amounted to $ 6,839.
9. LICENSE AGREEMENT
The Company has a licensing agreement with its President to pay a license fees
of 5% of the net selling price of licensed technologies. If the President does
not receive at least $4,000 per month, then all rights based on the agreement
are terminated and all rights to the technologies revert to the President. As of
August 31, 1999, the President had not been paid his fees and he had not
exercised his rights to terminate the agreement, although he retains the right
to do so in the future. The Company is dependent upon these technologies for its
product line.
10. YEAR 2000 COMPUTER CONSIDERATIONS (UNAUDITED)
The Company has completed an inventory of computer systems and other electronic
equipment that may be affected by the year 2000 issue and that are necessary to
conduct Company operations. The Company believes it is compliant with the year
2000.
Because of the unprecedented nature of the year 2000 issue, its effects and the
success of related remediation efforts will not be fully determinable until the
year 2000 and thereafter. Management cannot assure that the Company is or will
be year 2000 ready, that the Company's remediation efforts will be successful in
whole or in part, or that parties with whom the Company does business will be
year 2000 compliant.
F-10
<PAGE>
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Rad Source Technologies, Inc.
We hereby consent to the use in the Form 10-SB dated October 26, 1999 of our
report dated January 29, 1999 related to the financial statements of Rad Source
Technologies, Inc. for the year ended September 30, 1998 and for the period
October 11, 1996 (inception) to September 30, 1997 and for the period October
11, 1996 (inception) to September 30, 1998.
Sweeney, Gates & Co.
Fort Lauderdale, Florida
November 15, 1999
21
<PAGE>
EXHIBIT INDEX
Exhibit Description Page
- --------------------------------------------------------------------------------
2 Share Exchange Agreement
3.1 Articles of Incorporation
3.2 Bylaws
4 Specimen Share Certificate
10.1 License Agreement between Randol Kirk and the Company
10.2 Employment Agreement between Randol Kirk and the Company
10.3 Agreement between Rad Source Technologies Inc., and Capital International
Holdings Inc.
10.4 Agreement between Rad Source Technologies Inc. and USI Inc.
21 List of Subsidiaries of Rad Source Technologies Inc.
27 Financial Data Schedule
22
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
RAD SOURCE TECHNOLOGIES INC.
Dated: November 15, 1999 By: /s/ Randol Kirk
------------------ --------------------------------------
Randol Kirk, President and Director
23
EXHIBIT 2
AGREEMENT
AGREEMENT, made this 24th day of December 1998, by and among RAD SOURCE
TECHNOLOGIES, INC., a Florida corporation ("Buyer") and persons executing this
agreement (referred to collectively as "Shareholders" and individually as
"Shareholder") who own 100% of the outstanding shares of RAD SOURCE, INC., a
Florida corporation (the "Company").
WHEREAS, Buyer desires to acquire all of the issued and outstanding shares
of common stock of the Company in exchange for unissued shares of the common
stock of Buyer (the "Common Stock") (Exchange Offer"); and
WHEREAS, Shareholders desire to exchange all of their shares of Company
common stock; and
WHEREAS, Buyer desires to assist the Company in a business combination
which will result in the shareholders of the Company owning together 2,278,267
of the then issued and outstanding shares of Buyer's Common Stock and Buyer
holding at least 98% of the issued and outstanding shares of the Company's
common stock;
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
representations contained herein, the parties hereto agree as follows:
ARTICLE 1
EXCHANGE OF SECURITIES
1.1 Issuance of Shares. Subject to all of the terms and conditions of this
Agreement, Buyer agrees to exchange 2,278,267 shares of its common stock in
exchange for the outstanding Company common stock with the holders of such stock
as set forth in Exhibit 1.1 hereto. The Common Stock will be issued directly to
the Shareholders of the Company on the Closing.
1.2 Exemption from Registration. The parties hereto intend that the Common
Stock to be issued by the Company to the Shareholders shall be exempt from the
registration requirements of the Securities Act of 1933, as amended (the "Act"),
and pursuant to applicable state staturts.
1.3 Tax Free Exchange. The parties hereto intend that the exchange herein
be tax-free pursuant to Section 368 of the Internal Revenue Code of 1986. No
revenue ruling or opinion of counsel is being sought in this regard and such tax
treatment is not a condition to closing herein.
24
<PAGE>
1.4 Balance of Company Shares. It is anticipated that Buyer will acquire
the balance of 26,333 shares of Company common stock outstanding in exchange of
26,333 shares of Buyer common stock, but such transaction is not a condition to
closing herein.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
The Shareholders hereby represent and warrant to Buyer that:
2.1 Organization. The Company is a corporation duly organized, validly
existing, and in good standing under the laws of Florida, has all necessary
corporate powers to won its properties and to carry on its business as now owned
and operated by it, and is duly qualified to do business and is in good standing
in each of the states where its business requires qualification.
2.2 Capital. The authorized capital stock of Company consists of
100,000,000 shares of Common Stock, $.0001 par value, and 20,000,000 shares of
preferred stock, $.0001 par value, of which 2,304,600 shares of common stock and
no shares of preferred stock are currently issued and outstanding. All of the
issued and outstanding shares of Company are duly and validly issued, fully
paid, and nonassessable. There are no outstanding subscriptions, options,
rights, warrants, debentures, instruments, convertible securities, or other
agreements or commitments obligating Company to issue or to transfer from
treasury any additional shares of its capital stock of any class except as
specified in Exhibit A hereto.
2.3 Subsidiaries. As of the date of this Agreement, Company does not have
any subsidiaries or own any interest in any other enterprise (whether or not
such enterprise is a corporation) other than the following Subsidiaries set
forth in Exhibit B hereto.
2.4 Directors and Officers. Exhibit C to this Agreement contains the names
and titles of all directors and officers of Company as of the date of this
Agreement.
2.5 Financial Statements. The financial statements included in Exhibit D
hereto fairly present the financial position of Company as of the date of the
last balance sheet included in the financial statements, and the results of
operation for the periods indicated.
2.6 Absence of Changes. Since the date of the most recent financial
statements included in Exhibit D, there has not been any change in the financial
condition or operations of Company, except for changes in the ordinary course of
business, which changes have not in the aggregate been materially adverse.
2.7 Absence of Undisclosed Liabilities. As of the date of its most recent
balance sheet included in Exhibit D, Company did not have any material debt,
liability, or obligation of any nature, whether accrued, absolute,
25
<PAGE>
contingent or otherwise, and whether due or to become due, that is not reflected
in such balance sheet.
2.8 Tax Returns. Within the times and in the manner prescribed by law,
Company has filed all federal, state and local tax returns required by law and
has paid all taxes, assessments and penalties due and payable. The provisions
for taxes, if any, reflected in the balance sheet included in Exhibit A are
adequate for any and all federal, state, county and local taxes for the periods
ending on the date of the balance sheet and for all prior periods, whether or
not disputed. There are no present disputes as to taxes of any nature payable by
Company.
2.9 Investigation of Financial Condition. Without in any manner reducing
or otherwise mitigating the representations contained herein, Buyer and/or its
attorneys shall have the opportunity to meet with accountants and attorneys to
discuss the financial condition of Company. Company shall make available to
Buyer and/or its attorneys all books and records of Company. If the transaction
contemplated hereby is not completed, all documents received by Buyer and/or its
attorneys shall be returned to Company and all information so received shall be
treated as confidential.
2.10 Compliance with Laws. Company has complied with, and is not in
violation of, all applicable federal, state or local statues, laws and
regulations (including, without limitation, any applicable building, zoning,
environmental or other law, ordinance or regulation) affecting its properties or
the operation of its business, except for matters which would not have a
material affect on Company or its properties.
2.11 Litigation. Except as set forth in Exhibit 2.11 hereto, Company is
not a party to any suit, action, arbitration or legal, administrative or other
proceeding, or governmental investigation pending or, to the best knowledge of
Company, threatened against or affecting Company or its business, assets or
financial condition, except for matters which would not have a material affect
on Company or its properties. Company is not in default with respect to any
order, writ, injunction or decree of any federal, state, local or foreign court,
department, agency or instrumentality applicable to it. Company is not engaged
in any lawsuits to recover any material amount of monies due to it.
2.12 Ownership of Shares. The delivery of the Company common stock as
contemplated herein will result in Buyer's immediate acquisition of record and
beneficial ownership of all of the Company's capital stock as set forth on
Exhibit 1.1, free and clear of all liens and encumbrances.
2.13 Ability to Carry Out Obligations. The execution and delivery of this
Agreement by the Shareholders and the performance by the Shareholders of the
obligations hereunder in the time and manner contemplated will not cause,
constitute or conflict with or result in (a) any material breach or violation of
any of the provisions of or constitute a material default under any license,
indenture, mortgage, charter, instrument, articles of incorporation, by-laws, or
other agreement or instrument to which Company is a party, or by which it may be
bound, nor will any consents or authorizations of any party other than those
hereto be require. (b) an event that would permit any party to any material
agreement or instrument to terminate it or to accelerate the maturity of any
indebtedness or other obligation of Company, or (c) an event that would result
in the creation or imposition of any material lien, charge, or encumbrance on
any asset of Company.
26
<PAGE>
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Company and the Shareholders that:
3.1 Organization. Buyer is a corporation duly organized, validly existing,
and in good standing under the laws of Florida, has all necessary corporate
powers to own properties and to carry on business. A true and correct copy of
the Articles of Incorporation and By-laws of Buyer is annexed hereto as Exhibit
3.1. Buyer was originally incorporated as Computer Vending, Inc.
3.2 Capital. The authorized capital stock of Buyer consists of 50,000,000
shares of $.001 par value Common Stock and 10,000,000 of Preferred Stock of
which only 100,000 shares of common stock is outstanding. As of the closing
Buyer will have no more than 2,378,267 shares of common stock outstanding. All
of the issued and outstanding shares are duly and validly issued, fully paid and
nonassessable. There are no outstanding subscriptions, options, rights,
warrants, convertible securities, or other agreements or commitments obligating
Buyer to issue additional shares of its capital stock of any class. A true and
correct list of all outstanding shares of Buyer is annexed hereto as Exhibit
3.2.
3.3 Subsidiaries. Buyer does not have any subsidiaries or own any interest
in any other enterprise (whether or not such enterprise is a corporation).
3.4 Directors and Officers. Exhibit 3.4, annexed hereto and hereby
incorporated herein by reference, contains the names and titles of all directors
and officers of Buyer as of the date of this Agreement.
3.5 Financial Statements. Exhibit 3.5, annexed hereto and hereby
incorporated herein by reference, consists of the audited financial statements
of Buyer as of May 28, 1998, containing the balance sheets of Buyer and the
related statements of income and retained earnings for the period then ended,
and the financial statements have been prepared in accordance with generally
accepted accounting principles and practices consistently followed by Buyer
throughout the period indicated, and fairly present the financial position of
Buyer as of the dates of the balance sheets included in the financial
statements, and the results of operations for the period indicated.
3.6 Absence of Changes. Since May 28, 1998, there has not been any change
in the financial condition or operations of Buyer, except for changes in the
ordinary course of business, which changes have not in the aggregate been
materially adverse.
3.7 Absence of Undisclosed Liabilities. As of the date hereof, Buyer did
not have any material debt, liability, or obligation of any nature, whether
accrued, absolute, contingent, or otherwise, and whether due or to become due,
that is not reflected in Buyer's balance sheet as of May 28, 1998. As of the
Closing, Buyer will have no liabilities in excess of $10,000.
27
<PAGE>
3.8 Tax Returns. Within the times and the manner prescribed by law. Buyer
has filed all federal, state and local tax returns required by law and has paid
all taxes, assessments and penalties due and payable. There are no present
disputes as to taxes of any nature payable by Buyer. There was no taxable income
for 1998.
3.9 Investigation of Financial Condition. Without in any manner reducing
or otherwise mitigating the representations contained herein, Company shall have
the opportunity to meet with Buyer's accountants and attorneys to discuss the
financial condition of Buyer. Buyer shall make available to Company all books
and records of Buyer.
3.10 Compliance with Laws. Buyer has complied with, and is not in
violation of, all applicable federal, state or local statutes, laws and
regulations (including, without limitation, any applicable building, zoning,
environmental or other law, ordinance, or regulation) affecting its properties
or the operation of its business.
3.11 Litigation. Buyer is not a party to any suit, action, arbitration, or
legal, administrative, or other proceeding, or governmental investigation
pending or, to the best knowledge of Buyer, threatened against or affecting
Buyer or its business, assets, or financial condition. Buyer is not in default
with respect to any order, writ, injunction, or decree of any federal, state,
local, or foreign court, department agency, or instrumentally. Buyer is not
engaged in any legal action to recover moneys due to it.
3.12 The Board of Directors of Buyer has authorized the execution of this
Agreement and the transactions contemplated herein, and Buyer has full power and
authority to execute, deliver and perform this Agreement and this Agreement is
the legal, valid and binding obligation of Buyer, is enforceable in accordance
with its terms and conditions, except as may be limited by bankruptcy and
insolvency laws and by other laws affecting the rights of creditors generally.
The approval of Buyer's shareholders is not necessary for this transaction.
3.13 Ability to Carry Out Obligations. The execution and delivery of this
Agreement by Buyer and the performance by Buyer or conflict with or result in
(a) any material breach or violation of any of the provisions of or constitute a
default under any license, indenture, mortgage, charter, instrument, certificate
of incorporation, bylaw, or other agreement or instrument to which Buyer is a
party, or by which it may be bound, nor will any consents or authorizations of
any party other than those hereto be required, (b) an event that would permit
any party to any material agreement or instrument to terminate it or to
accelerate the maturity of any indebtedness or other obligation of Buyer, or (c
) an event that would result in the creation or imposition of any material lien,
charge, or encumbrance on any asset of Buyer.
3.14 Validity of Buyer Shares. The shares of Buyer Common Stock to be
delivered pursuant to this Agreement, when issued in accordance with the
provisions of this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable.
ARTICLE 4
28
<PAGE>
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
4.1 Share Ownership. The Shareholders hold shares of Company's common
stock as set forth on the signature page hereto. Such shares are owned of record
and beneficially by each holder thereof, and such shares are not subject to any
lien, encumbrance or pledge. Each Shareholder holds authority to exchange such
shares pursuant to this Agreement.
4.2 Investment Intent. Each Shareholder understands and acknowledges that
the shares of Buyer Common Stock (the "Buyer Shares") are being offered for
exchange in reliance upon the exemption provided in Section 4(2) of the
Securities Act of 1933 (the "Securities Act") for nonpublic offerings; and each
Shareholder makes the following representations and warrantees with the intent
that the same may be relied upon in determining the suit-ability of each
Shareholder as a purchaser of securities.
(a) The Buyer Shares are being acquired solely for the account of each
Shareholder, for investment purposes only, and not with a view to, or for sale
in connection with any distribution thereof and with no present intention of
distributing or reselling any part of the Buyer Shares.
(b) Each Shareholder agrees not to dispose of his Buyer Shares or any
portion thereof unless and until counsel for Buyer shall have determined that
the intended disposition is permissible and does not violate the Securities Act
or any applicable state securities laws, or the rules and regulations
thereunder.
(c) Each Shareholder acknowledges that Buyer has made all documentations
pertaining to all aspects of the Exchange Offer available to him and to his
qualified representatives, if any, and has offered such person or persons an
opportunity to discuss the Exchange Offer with the officers of Buyer.
(d) Each Shareholder is knowledgeable and experienced in making and
evaluating investments of this nature and desires to accept the Exchange Offer
on the terms and conditions set forth.
(e) Each Shareholder is able to bear the economic risk of an investment,
as a result of the Exchange Offer, in the Buyer Shares.
(f) Each Shareholder understands that an investment in the Buyer shares is
not liquid, and each Shareholder has adequate means of providing for current
needs and personal contingencies and has no need for liquidity in this
investment.
(g) Except as set forth on Exhibit A, each Shareholder agrees not to sell
or transfer his, her or its Buyer Shares for a period of 24 months from the date
of Closing herein.
4.3 Indemnification. Each Shareholder recognizes that the offer of the
Buyer shares to him is based upon his representations and warranties set forth
and contained herein and hereby agrees to indemnify and hold harmless Buyer
against all liability, costs or expenses (including reasonable attorney's fees)
arising as a result of any
29
<PAGE>
misrepresentations made herein by such Shareholder.
4.4 Legend. Each Shareholder agrees that the certificates evidencing the
Buyer Shares acquired pursuant to this Agreement will have a legend placed
thereon stating that the securities have not been registered under the Act or
any state securities laws and setting forth or referring to the restrictions on
transferability and sales of the Shares herein.
ARTICLE 5
COVENANTS
5.1 Investigative Rights. From the date of this Agreement until the
Closing Date, each party shall provide to the other party, and such other
party's counsels, accountants, auditors, and advance written notice to all of
each party's properties, books, contracts, commitments, and records for the
purpose of examining the same. Each party shall furnish the other party with all
information concerning each party's affairs as the other party may reasonably
request.
5.2 Conduct of Business. Prior to the Closing, Buyer and Company shall
each conduct its business in the normal course, and shall not sell, pledge, or
assign any assets, without the prior written approval of the other party, except
in the regular course of business. Neither Buyer or Company shall amend its
Articles of Incorporation or Bylaws, declare, dividends, redeem or sell stock or
other securities, incur additional or newly-funded liabilities, acquire or
dispose of fixed assets, change employment terms, enter into any material or
long-term contract, guarantee obligations of any third party, settle or
discharge any balance sheet receivable for less than its state amount, pay more
on any liability than its stated amount, or enter into any other transaction
other than in the regular course of business.
ARTICLE 6
CONDITIONS PRECEDENT TO BUYERS PERFORMANCE
6.1 Conditions. Buyer's obligations hereunder shall be subject to the
satisfaction, at or before the Closing, of all the conditions set forth in this
Article 6. Buyer may waive any or all of these conditions in whole or in part
without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by Buyer of any other condition of or any of Buyer's
other rights or remedies, at law or in equity, if Shareholders shall be in
default of any of their representations, warranties, or covenants under this
Agreement.
6.2 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by Shareholders in this Agreement
or in any written statement that shall be delivered to Buyer by Shareholders
under this Agreement shall be true and accurate on and as of the Closing Date as
though made at that time.
6.3 Performance. Shareholders shall have performed, satisfied, and
complied with all covenants,
30
<PAGE>
agreements, and conditions required by this Agreement to be performed or
complied with by it, on or before the Closing Date.
6.4 Absence of Litigation. No action, suit, or proceeding before any court
or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against Company on or before the Closing Date.
6.5 Acceptance by Company Shareholders. The holders of an aggregate of not
less than 100% of the issued and outstanding shares of common stock of Company
shall have agreed to exchange their shares for shares of Buyer Common Stock.
6.6 Certificate. Shareholders shall have delivered to Buyer a certificate,
dated the Closing Date, certifying that each of the conditions specified in
Sections 6.2 through 6.5 hereof have been fulfilled.
ARTICLE 7
CONDITIONS PRECEDENT TO SHAREHOLDERS' PERFORMANCE
7.1 Conditions. Shareholders' obligations hereunder shall be subject to
the satisfaction, at or before the Closing, of all the conditions set forth in
this Article 7. Shareholders may waive any or all of these conditions in whole
or in part without prior notice; provided, however, that no such waiver of a
condition shall constitute a waiver by Shareholders of any other condition of or
any of Shareholders' rights or remedies, at law or in equity, if Buyer shall be
in default of any of its representations, warranties, or covenants under this
Agreement.
7.2 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by Buyer in this Agreement or in
any written statement that shall be delivered to Shareholders by Buyer under
this Agreement shall be true and accurate on and as of the Closing Date as
though made at that time.
7.3 Performance. Buyer shall have performed, satisfied, and complied will
all covenants, agreements, and conditions required by this Agreement to be
performed or complied with by it, on or before the Closing Date.
7.4 Absence of Litigation. No action, suit or proceeding before any court
or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against Buyer on or before the Closing Date.
7.5 Officers Certificate. Buyer shall have delivered to Shareholders a
certificate, dated the Closing Date and signed by the President of Buyer
certifying that each of the conditions specified in Sections 7.2 through 7.4
have been fulfilled.
7.6 Option. The Buyer has received an option to acquire 94,600 shares of
Buyer's common Stock
31
<PAGE>
from Nancy Schwartz for 30 days after the Closing for $50,000 in a form approved
by counsel for the Shareholders.
ARTICLE 8
CLOSING
8.1 Closing. The Closing of this transaction shall be held at the offices
of Buyer, or such other place as shall be mutually agreed upon, on such date as
shall be mutually agreed upon by the parties. At the Closing:
(a) Each Shareholder shall present the certificates representing his
shares of Company being exchanged to Buyer, and such certificates will be duly
endorsed.
(b) Each Shareholder shall receive a certificate or certificates
representing the number of shares of Buyer Common Stock for which the shares of
Company common stock shall have been exchanged.
(c) Buyer shall deliver an officer's certificate, as described in Section
7.5 hereof, dated the Closing Date, that all representations, warranties,
covenants and conditions set forth in this Agreement on behalf of Buyer are true
and correct as of, or have been fully performed and complied with by, the
Closing Date.
(d) Buyer shall deliver a signed consent and/or Minutes of the Directors
of Buyer approving this Agreement and each matter to be approved by the
Directors of Buyer under this Agreement.
(e) Shareholders shall deliver a certificate, as described in Section 6.6
hereof, dated the Closing Date, that all representations, warranties, covenants
and conditions set forth in this Agreement on behalf of Shareholders are true
and correct as of, or have been fully performed and complied with by, the
Closing Date.
ARTICLE 9
MISCELLANEOUS
9.1 Captions. The Article and paragraph headings throughout this Agreement
are for convenience and reference only, and shall in no way be deemed to define,
limit, or add to the meaning of any provision of this Agreement.
9.2 No Oral Change. This Agreement and any provision hereof, may not be
waived, changed, modified, or discharged orally, but it can be changed by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modifications, or discharge is sought.
9.3 Non-Waiver. Except as otherwise expressly provided herein, no waiver
of any covenant, condition, or provision of this Agreement shall be deemed to
have been made unless expressly in writing and signed by the party against whom
such waiver is charged; and (i) the failure of any party to insist in any or
more cases upon the
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performance of any of the provisions, covenants, or conditions of this Agreement
or to exercise any option herein contained shall not be construed as a waiver or
relinquishment for the future of any such provisions, covenants, or conditions,
(ii) the acceptance of performance of anything required by this Agreement to be
performed with knowledge of the breach or failure of a covenant, condition, or
provisions hereof shall not be deemed a waiver of such breach or failure, and
(iii) no waiver by any party of one breach by another party shall be construed
as a waiver with respect to any other or subsequent breach.
9.4 Time of Essence. Time is of the essence of this Agreement and of each
and every provision hereof.
9.5 Entire Agreement. This Agreement contains the entire Agreement and
understanding between the parties here to, supersedes all prior agreements and
understandings, and constitutes a complete and exclusive statement of the
agreements, responsibilities, representations and warranties of the parties.
9.6 Choice of Law. This Agreement and its application shall be governed by
the laws of the State of Florida.
9.7 Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.8 Notices. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice is
to be given, or on the third day after mailing, if mailed to the party to whom
notice is to be given, by first class mail, registered or certified, postage
prepaid, and properly addressed as follows:
Buyer: Rad Source Technologies, Inc.
Shareholders:
9.9 Binding Effect. This Agreement shall inure to and be binding upon the
heirs, executors, personal representatives, successors and assigns of each of
the parties to this Agreement.
9.10 Mutual Cooperation. The parties hereto shall cooperate with each
other to achieve the purpose of this Agreement, and shall execute such other and
further documents and take such other and further action as may be necessary or
convenient to effect the transaction described herein.
9.11 Announcements. Buyer and Shareholders will consult and cooperate with
each other as to the timing and content of any announcements of the transactions
contemplated hereby to the general public or to employees, customers or
suppliers.
9.12 Expenses. Each party will pay its own legal, accounting and any other
out-of-pocket expenses
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reasonably incurred in connection with this transaction, whether or not the
transaction contemplated hereby is consummated.
9.13 Survival of Representations and Warranties. The representations,
warranties, covenants and agreements of the parties set forth in this Agreement
or in any instrument, certificate, opinion, or other writing providing for in
it, shall survive the Closing irrespective of any investigation made by or on
behalf of any party.
9.14 Exhibits. As of the execution hereof, the parties hereto have
provided each other with the Exhibits provided for hereinabove, including any
items referenced therein or required to be attached thereto. Any material
changes to the Exhibits shall be immediately disclosed to the other party.
9.15 Arbitration of Disputes. Any dispute or controversy arising out of or
relating to this Agreement, any document or instrument delivered pursuant to, in
connection with, or simultaneously with this Agreement, or any breach of this
Agreement or any such document or instrument shall be settled by arbitration to
be held in Miami, Florida in accordance with the rules then in affect of the
American Arbitration Association or any successor thereto. The arbitrator may
grant injunctions or further relief in such dispute or controversy. The decision
of the arbitration shall be final, conclusive and binding on the parties to the
arbitration. Judgment may be entered at the arbitrator's decision in any court
having jurisdiction. Each party in such arbitration shall pay their respective
costs and expenses if such arbitrator and all the reasonable attorneys' fees and
expenses of their respective counsel.
AGREED TO AND ACCEPTED as of the date first above written.
RAD SOURCE TECHNOLOGIES, INC.
By: /s/ Nancy Schwartz, President
---------------------------------
THE COMPANY SHAREHOLDERS
By: /s/ Randol E. Kirk, President
---------------------------------
Rad Source 12-24-98
-------------------
34
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
- of -
Computer Vending, Inc.
WE, THE UNDERSIGNED, hereby associate ourselves together for the purpose
of becoming a corporation under the Laws of the State of Florida, by and under
the provisions of the Statutes of the said State of Florida.
ARTICLE I
This name of this corporation shall be:
COMPUTER VENDING, INC.
ARTICLE II
The corporation may engage in any activity or business permitted under the
laws of the United States and of the State of Florida.
ARTICLE III
The maximum number of shares of capital stock that this corporation is
authorized to have outstanding at any time is FIVE HUNDRED (500) shares of
common stock having a par value of ONE ($1.00) DOLLAR PER SHARE.
ARTILE IV
The amount of capital with which this corporation will begin business
shall be the sum of not less than FIVE HUNDRED ($500.00) DOLLARS.
ARTICLE V
This corporation shall exist perpetually unless sooner dissolved according
to law.
ARTICLE VI
The initial street of the principal office of the corporation shall be:
719 No. Highlands Drive
Hollywood, Florida 33021
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ARTICLE VII
The number of Directors of this corporation shall be at least one (1) and
no more than five (5).
ARTICLE VIII
The names and street addresses of the members of the first Board of
Directors of this Corporation are as follows:
James R. Beckett
604 No. Ocean Boulevard, Suit 1-B
Pompano, Florida 33062
ARTICLE IX
The names and street addresses of the persons signing these Articles of
Incorporation as subscribed is as follows:
James R. Beckett
604 No. Ocean Boulevard, Suite 1-B
Pompano, Florida 33062
ARTICLE X
The Corporate existence of this corporation shall begin on the date the
Articles of Incorporation are filed of record.
IN WITNESS WHEREOF, the undersigned James R. Beckett AND , both being
natural persons competent to contract, have hereunto sat their hands and seals
this 29th day of June 1990.
/s/ James R. Beckett (SEAL)
- --------------------------------------------------------------------------------
(SEAL)
- --------------------------------------------------------------------------------
STATE OF FLORIDA )
) ss
COUNTY OF BROWARD )
BEFORE ME, the undersigned Notary Public of the State of Florida
personally appeared James R. Beckett to me well known and known to me to be the
individuals described in and who executed the foregoing Articles of
Incorporation, and they acknowledged before me that they executed the same
freely and voluntarily for the purpose therein expressed.
WITNESS my hand and official seal the day of 19
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CERTIFIACTE DESIGNATING PLACE OF BUSINESS OR DOMICILE
FOR THE SERVICE WITHIN THIS STATE,
NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Computer Vending, Inc.
In pursuance of Chapter 48.091, Florida Statues, the following is
submitted in compliance with said Act. FIRST that Computer Vending, Inc. being
organized under the laws of the State of Florida with its principal office as
indicated in the Articles of Incorporation, in the City of Hollywood County of
Broward , State of Florida has named James R. Beckett located at 719 No.
Highlands Drive, Hollywood, Florida 33021 , Florida as its agents to accept
services of processing in this State.
ACKNOWLEDGEMENT
Having been named to accept services of process for the above stated
corporation at the place designated in this certificate, I hereby accept to act
in this capacity, and agree to comply with the provisions of said Act relative
to keeping open said office.
By: /s/ James R. Beckett
--------------------
Resident Agent
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ARTICLES OF AMENDMENT TO
COMPUTER VENDING, INC.
THE UNDERSIGNED, being the sole director and president of Computer
Vending, Inc., does hereby amend the Articles of Incorporation of Computer
Vending, Inc. as follows;
ARTICLE I
CORPORATE NAME
The name of the Corporation shall be Computer Vending, Inc.
ARTICLE II
PURPOSE
The Corporation shall be organized for any and all purposes authorized
under the laws of the state of Florida.
ATRICLE III
PERIOD OF EXISTENCE
The period during which the Corporation shall continue is perpetual.
ARTICLE IV
SHARES
The capital stock of this corporation shall consist of 50,000,000 shares
of common stock, $.001 par value.
ARTICLE V
PLACE OF BUSINESS
The address of the principal place of business of this corporation in the
State of Florida shall be 5600 French Plum Lane, Tamarac, Florida 33321. The
Board of Directors may at any time and from time to time move the principal
office of this corporation.
ARTICLE VI
DIRECTORS AND OFFICERS
The business of this corporation shall be managed by its Board of
Directors. The number of such directors shall be not be less than one (1) and,
subject to such minimum may be increased or decreased from time to time in the
manner provided in the By-Laws.
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ARTICLE VII
DENIAL OF PREEMPTIVE RIGHTS
No shareholder shall have any right to acquire shares or other securities
of the Corporation except to the extent such right may be granted by an
amendment to these Articles of Incorporation or by a resolution of the board of
Directors.
ARTICLE VIII
AMENDMENT OF BYLAWS
Anything in these Articles of Incorporation, the Bylaws, or the Florida
Corporation Act notwithstanding, bylaws shall not be adopted, modified, amended
or repealed by the shareholders of the Corporation except upon the affirmative
vote of a simple majority vote of the holders of all the issued and outstanding
shares of the corporation entitled to vote thereon.
ARTICLE IX
SHAREHOLDERS
9.1. Inspection of Books. The board of directors shall make reasonable
rules to determine at what times and places and under what conditions the books
of the Corporation shall be open to inspection by shareholders or a duly
appointed representative of a shareholder.
9.2 Control Share Acquisition. The provisions relating to any control
share acquisition as contained in Florida Statues now, or hereinafter amended,
and any successor provision shall not apply to the Corporation.
9.3 Quorum. The holders of shares entitled to one-third of the votes at a
meeting of shareholder's shall constitute a quorum.
9.4 Required Vote. Acts of shareholders shall require the approval of
holders of 50.01% of the outstanding votes of shareholders.
ARTICLE X
LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
To the fullest extent permitted by law, no director or officer of the
Corporation shall be personally liable to the Corporation or its shareholders
for damages for breach of any duty owed to the Corporation or its shareholders.
In addition, the Corporation shall have the power, in its By-Laws or in any
resolution of its stockholders or directors, to undertake to indemnify the
officers and directors of this corporation against any contingency or peril as
may be determined to be in the best interests of this corporation, and in
conjunction therewith, to procure, at this corporation's expense, policies of
Insurance.
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ARTICLE XI
CONTRACTS
No contract or other transaction between this corporation and any person,
firm or corporation shall be affected by the fact that any officer or director
of this corporation is such other party or is, or at some time in the future
becomes, an officer, director or partner of such other contracting party, or has
now or hereafter a direct or indirect interest in such contract.
I hereby certify that the following was adopted by a majority vote of the
shareholders and directors of the corporation on May 20th, 1998 and that the
number of votes cast was sufficient for approval.
IN WITNESS WHEREOF, I have hereunto subscribed to and executed this
Amendment to Articles of Incorporation this on May 20th, 1998.
/s/ Nancy Schwartz
- -------------------------------------------
Nancy Schwartz, Sole Director and President
The foregoing instrument was acknowledged before me on May 4, 1998, by
Nancy Schwartz, who is personally known to me.
/s/ Richard Leon Newberg
------------------------
Notary Public
My commission expires 12/12/98
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ARTICLES OF AMENDMENT TO
COMPUTER VENDING, INC.
THE UNDERSIGNED, being the sole director and president of Computer
Vending, Inc., does hereby amend its Articles of Incorporation affective
December 17, as follows:
ARTICLE I
CORPORATE NAME
The new name of the Corporation shall be RAD SOURCE TECHNOLOGIES, INC.
I hereby certify that the following was adopted by a majority vote of the
shareholders and directors of the corporation on December 17, 1998 and then the
number of votes cast was sufficient for approval.
IN WITNESS WHEREOF, I have hereunto subscribed to and executed this
Amendment to Articles of Incorporation on December 12, 1998.
/s/ Nancy Schwartz
- -------------------------------------------
Nancy Schwartz, Sole Director and President
The foregoing instrument was acknowledged before me on December 17, 1998
by Nancy Schwartz, who is personally known to me.
/s/
------------------------
Notary Public
My commission expires
41
EXHIBIT 3.2
BY-LAWS OF COMPUTER VENDING, INC.
ARTICLE I. MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders of this
corporation shall be held on the 30th day of June of each year or at such other
time and place designated by the Board of Directors of the corporation. Business
transacted at the annual meeting shall include the election of directors of the
corporation. If the designated day shall fall on a Sunday or legal holiday, then
the meeting shall be held on the first business day thereafter.
Section 2. Special Meetings. Special meetings of the shareholders shall be held
when directed by the President or the Board of Directors, or when requested in
writing by the holders of not less than 10% of all the shares entitled to vote
at the meeting. A meeting requested by shareholders shall be called for a date
not less than 3 nor more than 30 days after the request is made, unless the
shareholders requesting the meeting designate a later date. The call for the
meeting shall be issued by the Secretary, unless the President, Board of
Directors, or shareholders requesting the meeting shall designate another person
to do so.
Section 3. Place. Meetings of shareholders shall be held at the principal place
of business of the corporation or at such other place as may be designated by
the Board of Directors.
Section 4. Notice. Written notice stating the place, day and hour of the meeting
and in the case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than 3 nor more than 30 days
before the meeting, either personally or by first class mail, or by the
direction of the President, the Secretary or the officer or persons calling the
meeting to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail addressed to the shareholder at his address as it appears on the
Stock transfer books of the corporation, with postage thereon prepaid.
Section 5. Notice of Adjourned Meeting. When a meeting is adjourned to another
time or place, it shall not be necessary to give any notice of the adjourned
meeting if the time and place to which the meeting is adjourned are announced at
the meeting at which the adjournment is taken, and at the adjourned meeting any
business may be transacted that might have been transacted on the original date
of the meeting. If, however, after the adjournment the Board of Directors fixes
a new record date for the adjourned meeting, a notice of the adjourned meeting
shall be given as provided in this Article to each shareholder of record on a
new record date entitled to vote at such meeting.
Section 6. Shareholder Quorum and Voting. A majority of the shares entitled to
vote, represented in person or by proxy, shall constitute a quorum at a meeting
of shareholders. If a quorum is present, the affirmative vote of a majority of
the shares represented at the meeting and entitled to vote on the subject matter
shall be the act of
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the shareholders unless otherwise provided by law.
Section 7. Voting of Shares. Each outstanding share shall be entitled to one
vote on each matter submitted to a vote at a meeting of shareholders.
Section 8. Proxies. A shareholder may vote either in person or by proxy executed
in writing by the shareholder or his duly authorized attorney-in-fact. No proxy
shall be valid after the duration of 11 months from the date thereof unless
otherwise provided in the proxy.
Section 9. Action by Shareholders Without a Meeting. Any action required by law
or authorized by these by-laws or the Articles of Incorporation of this
corporation or taken or to be taken at any annual or special meeting of
shareholders, or any action which may be taken at any annual or special meeting
of shareholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding Stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted.
ARTICLE II. DIRECTORS
Section 1. Function. All corporate powers shall be exercised by or under
the authority of, and the business and affairs of the corporation shall be
managed under the direction of, the Board of Directors.
Section 2. Qualification. Directors need not be residents of this state or
shareholders of this corporation.
Section 3. Compensation. The Board of Directors shall have authority to
fix the compensation of directors.
Section 4. Presumption of Assent. A director of the corporation who is
present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
taken unless he votes against such action or abstains from voting in
respect thereto because of an asserted conflict of interest.
Section 5. Number. This corporation shall have a minimum of 1 director but
no more than 7.
Section 6. Election and Term. Each person named in the Articles of
Incorporation as a member of the initial Board of Directors shall hold
office until the next shareholder meeting or until his earlier
resignation, removal from office or death. If no shareholder meeting takes
place, each director shall continue serve until such meeting takes place.
At each shareholder the shareholders shall elect directors to hold office
until the next succeeding shareholder meeting. Each director
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shall hold office for a term for which he is elected and until his
successor shall have been elected and qualified or until his earlier
resignation, removal from office or death.
Section 7. Vacancies. Any vacancy occurring in the Board of Directors,
including any vacancy created by reason of an increase in the number of
Directors, may be filled by the affirmative vote of a majority of the
remaining directors though less than a quorum of the Board of Directors. A
director elected to fill a vacancy shall hold office only until the next
election of directors by the shareholders.
Section 8. Removal of Directors. At a meeting of shareholders called
expressly for that purpose, any director or the entire Board of Directors
may be removed, with or without cause, by a vote of the holders of a
majority of the shares then entitled to vote at an election of directors.
Section 9. Quorum and Voting. A majority of the number of directors fixed
by these by-laws shall constitute a quorum for the transaction of
business. The act of a majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors.
Section 10. Executive and Other Committees. The Board of Directors, by
resolution adopted by a majority of the full Board of Directors, may
designate from among its members an executive committee and one or more
other committees each of which, to the extent provided in such resolution
shall have and may exercise all the authority of the Board of Directors,
except as is provided by law.
Section 11. Place of Meeting. Regular and special meetings of the Board of
Directors shall be held at the principal place of business of the
corporation or as otherwise determined by the Directors.
Section 12. Time, Notice and Call of Meetings. Regular meetings of the
Board of Directors shall be held without notice on the first Monday of the
calendar month two (2) months following the end of the corporation's
fiscal, or if the said first Monday is a legal holiday, then on the next
business day. Written notice of the time and place of special meetings of
the Board of Directors shall be given to each director by either personal
delivery, telegram or cablegram at least three (3) days before the meeting
or by notice mailed to the director at least 3 days before the meeting.
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Notice of a meeting of the Board of Directors need not be given to any director
who signs a waiver of notice either before or after the meeting. Attendance of a
director at a meeting shall constitute a waiver of notice of such meeting and
waiver of any and all objections to the place of the meeting, the time of the
meeting, or the manner in which it has been called or convened, except when a
director states, at the beginning of the meeting, any objection to the
transaction of business because the meeting is not lawfully called or convened.
Neither the business to be transacted at, nor the purpose, of any regular or
special meeting of the Board of Directors need be specified in the notice of
waiver of notice of such meeting. A majority of the directors present, whether
or not a quorum exists, may adjourn any meeting of the Board of Directors to
another time and place. Notice of any such adjourned meeting shall be given to
the directors who were not present at the time of the adjournment, and unless
the time and place of adjourned meeting are announced at the time of the
adjournment, to the other directors. Meetings of the Board of Directors may be
called by the chairman of the board, by the president of the corporation or by
any two directors. Members of the Board of Directors may participate in a
meeting of such board by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time. Participation by such means shall
constitute presence in person at a meeting.
Section 13. Action Without a Meeting. Any action, required to be taken at a
meeting of the Board of Directors, or any action which may be taken at a meeting
of the Board of Directors or a committee thereof, may be taken without a meeting
if a consent in writing, setting forth the action so to be taken, is signed by
such number of the directors, or such number of the members of the committee, as
the case may be, as would constitute the requisite majority thereof for the
taking of such actions, is filed in the minutes of the proceedings of the board
or of the committee. Such actions shall then be deemed taken with the same force
and effect as though taken at a meeting of such board or committee whereat all
members were present and voting throughout and those who signed such action
shall have voted in the affirmative and all others shall have voted in the
negative. For informational purposes, a copy of such signed actions shall be
mailed to all members of the board or committee who did not sign said action,
provided however, that the failure to mail said notices shall in no way
prejudice the actions of the board or committee.
ARTICLE III. OFFICERS
Section 1. Officers. The officers of this corporation shall consist of a
president, a secretary and a treasurer, each of whom shall be elected by the
Board of Directors. Such other officers and assistant officers and agents as may
be deemed necessary may be elected or appointed by the Board of Directors from
time to time. Any two or more offices may be held by the same person.
Section 2. Duties. The officers of this corporation shall have the following
duties:
The President shall be the chief executive officer of the corporation, shall
have general and active management of the business and affairs of the
corporation subject to the directions of the Board of Directors, and shall
preside at all meetings of the shareholders and Board of Directors.
The Secretary shall have custody of, and maintain, all of the corporate records
except the financial records; shall
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record the minutes of all meetings of the shareholders and Board of directors,
send all notices of all meetings and perform such other duties as may be
prescribed by the Board of Directors or the President.
The Treasurer shall have custody of a II corporate funds and financial records,
shall keep full and accurate accounts of receipts and disbursements and render
accounts thereof at the annual meetings of shareholders and whenever else
required by the Board of Directors or the President, and shall perform such
other duties as may be prescribed by the Board of Directors or the President.
Section 3. Removal of Officers. An officer or agent elected or appointed by the
Board of Directors may be removed by the board whenever in its judgment the best
interests of the corporation will be served thereby. Any vacancy in any office
may be filed by the Board of Directors.
ARTICLE IV. STOCK CERTIFICATES
Section 1. Issuance. Every holder of shares in this corporation shall be
entitled to have a certificate representing all shares to which he is entitled.
No certificate shall be issued for any share until such share is fully paid.
Section 2. Form. Certificates representing shares in this corporation shall be
signed by the President or Vice President and the Secretary or an Assistant
Secretary and may be sealed with the seal of this corporation or a facsimile
thereof.
Section 3. Transfer of Stock. The corporation shall register a Stock certificate
presented to it for transfer if the certificate is properly endorsed by the
holder of record or by his duly authorized attorney.
Section 4. Lost, Stolen or Destroyed Certificates. If the shareholder shall
claim to have lost or destroyed a certificate of shares issued by the
corporation, a new certificate shall be issued upon the making of an affidavit
of that fact by the person claiming the certificate of Stock to be lost, stolen
or destroyed, and, at the discretion of the Board of Directors, upon the deposit
of a bond or other indemnity in such amount and with such sureties, if any, as
the board may reasonably require.
ARTICLE V. BOOKS AND RECORDS
Section 1. Books and Records. This corporation shall keep correct and complete
books and records of account and shall keep minutes of the proceedings of its
shareholders, Board of Directors and committee of directors. This corporation
shall keep at its registered office, or principal place of business a record of
its shareholders, giving the names and addresses of all shareholders and the
number of the Shares held by each. Any books, records and minutes may be in
written form or in any other form capable of being converted into written form
within a reasonable time.
Section 2. Shareholders' Inspection Rights. Any person who shall have been a
holder of record of Shares of
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voting trust certificates therefor at least six months immediately preceding his
demand or shall be the holder of record of, or the holder of record of voting
trust certificates for, at least five percent of the outstanding Shares of the
corporation, upon written demand stating the purpose thereof, shall have the
right to examine, in person or by agent or attorney, at any reasonable time or
times, for any proper purpose its relevant books and records of accounts,
minutes and records of shareholders and to make extracts therefrom.
Section 3. Financial Information. Not later than four months after the close of
each fiscal year, this corporation shall prepare a balance sheet showing in
reasonable detail the financial condition of the corporation as of the close of
its fiscal year, and a profit and loss statement showing the results of the
operations of the corporation during the fiscal year.
Upon the written request of any shareholder or holder of voting trust
certificates for Shares of the corporation, the corporation shall mail to each
shareholder or holder of voting trust certificates a copy of the most recent
such balance sheet and profit and loss statement. The balance sheets and profit
and loss statements shall be filed in the registered office of the corporation
in this state, shall be kept for at least five years, and shall be subject to
inspection during business hours by any shareholder or holder of voting trust
certificates, in person or by agent.
ARTICLE VI. DIVIDENDS
The Board of Directors of this corporation may, from time to time, declare and
the corporation may pay dividends on its Shares in cash, property or its own
Shares, except when the corporation is insolvent or when the payment thereof
would render the corporation insolvent subject to the provisions of the Florida
Statutes.
ARTICLE VII. CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall be in circular
form.
ARTICLE VIII. AMENDMENT
These by-laws may be altered, amended or repealed, and new by-laws may be
adopted by the a majority vote of the directors of the corporation.
47
EXHIBIT 4
48
EXHIBIT 10.1
LICENSE AGREEMENT
This Agreement is entered into as of September 15, 1999.
Licensor, Randol E. Kirk (Kirk), of 8208 NW 6th Street, Coral Springs,
Florida 33071 owns the rights, title and interest in and to certain technology
and know-how concerning and relating to the irradiation of products, materials
and matter by tube X-Rays (the Licensed Technology). U.S. Patent Applications
based on the aforesaid technology are in preparation.
Licensee, Rad Source Technologies, Inc. (Rad Source), is a Florida
corporation having offices at 475 Ramblewood Drive #207, Coral Springs, Florida
33071 and has as one of its purposes, the licensing of patent and Licensed
Technology rights relating to tube X-Ray irradiation.
Licensee wants the right to license said Licensed Technology, and Licensor
wants Licensee to have the right to license and sublicense said Licensed
Technology.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
Definitions
The following terms, whenever used in this Agreement, have the respective
meanings set forth below:
1.1 "Licensed Technology" means the inventions, developments, patent
applications on the inventions and developments, and the patents issued based on
the patent applications, know-how and technical information included in certain
technology and know-how concerning and relating to the irradiation of products,
materials and matter by tube X-Rays (the Licensed Technology).
The Licensed Technology includes the following product areas:
A. Laboratory X-Ray irradiators for small animals, cells and pupae,
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B. X-Ray irradiators for human blood and blood products, and
C. Irradiators using an X-Ray tube with other than a point source of
emission.
U.S. Patent Applications based on the aforesaid technology are in
preparation; foreign patents are to be filed corresponding to said U.S.
Patent Applications.
1.2 "Licensed Products" means a) products utilizing the Licensed
Technology, and b) processes or methods utilizing the Licensed Technology.
1.3 "Sale/Sold" means the sale, transfer, exchange or lease of Licensed
Products. Sales of Licensed Products shall be deemed consummated upon the
receipt of payment from the purchaser.
1.4 "Net Selling Price" of Licensed Products means the gross selling price
to the purchaser (net of discounts and allowances) of Licensed Products less (a)
returns which are accepted by Licensee (or its sublicensee) gives credit to such
purchasers, and (b) sales, use, value added and other similar taxes which
Licensee (or any sublicensee) is under legal obligation to pay. In case of a
Sale for which payment is made in installments, the Net Selling Price in each
fiscal quarter for purposes of determining the royalty to be paid to Licensor
under Section 8 below shall be the aggregate amount of payments received by
Licensee in such quarter.
1.5 "Licensor's Auditors" means the independent chartered public
accountants regularly employed by Licensor to examine its accounts and report on
its financial statements.
1.6 "Subject Matter of the Agreement" means the Licensed Technology, the
Licensed Products, and the processes and methods utilizing the Licensed
Technology.
Representations and Documentation
2.1 Licensor represents and warrants that they have the right to enter
into this Agreement, that they have not granted any outstanding conflicting
rights, that they know of no conflicting rights which would permit any third
party to interfere with rights granted to Licensee hereunder, and that they have
not made, nor will they make any commitment to any third party inconsistent with
or in derogation of the rights granted hereunder.
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2.2 Licensor agrees to provide to Licensee all documentation which
Licensor has in his possession or is reasonably available to him describing said
Licensed Technology, and such documentation shall include correspondence,
drawings, software, sketches, prospective users and prospective customers of
said Licensed Technology.
Grant of Exclusive License and Right to Grant of Sublicenses
3.1 Subject to the terms and conditions set forth herein, Licensor hereby
grant to Licensee the right and license to make, use, sell and offer for sale
the Licensed Technology in connection with the development, design, manufacture
and use of Licensed Products; and, the right to grant sublicenses thereunder,
and Licensee shall pay royalties to Licensor, based on the sale of products
under said sublicenses, which are equal to and commensurate with, the percentage
royalty specified in paragraph 5.1 herein.
Term of License
4.1 Unless sooner terminated as otherwise provided herein, this Agreement
shall commence on the date first above written and shall continue in effect for
ten (10) years. Provided all royalty payments have been duly paid, Licensee has
the right of first refusal and option to extend the term of this agreement, on
mutually agreed terms, for the full term of the last to expire U.S. Patent on
the Licensed Technology.
License fee and Royalties
5.1 As consideration for the license granted herein, Licensee shall pay to
Licensor, at the times and in the manner provided in paragraphs 5.2, 5.3, and
5.4 below, royalties equal to five (5%) of the total Net Selling Price of
Licensed Technology and Licensed products made, used or sold by Licensee, or by
any sublicensee.
5.2 Royalties are to be paid monthly, within ten (10) days after the end
of the month on which the royalties become due.
5.3 If the amount received by Licensor from Licensee is less than
$12,000.00 (twelve thousand dollars) per fiscal
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quarter, payable in monthly installments of at least $4,000.00 (four thousand
dollars) per month, all rights based on this agreement are terminated and all
rights to said Licensed Technology revert to Licensor.
5.4 It is contemplated that Licensor may render services as an employee
of, or as a consultant to licensee, and any employee salary or consulting income
to Licensor will be credited toward the minimum royalties due under paragraph
5.3, only. That is, royalties on the products are due independently of any
salary or consulting income; however, Licensor does not have the right to
terminate under paragraph 5.3 if the minimum income to him from Licensee is at
least $12,000 (twelve thousand dollars) per fiscal quarter.
5.5 Licensee agrees to pay any amounts due Licensor, or to any person or
entity designated by Licensor, by mailing payment by first class US mail to the
above address of Licensor, or to the latest address provided by Licensor, or to
the address of the designee.
5.6 It is understood and agreed that this Agreement grants Licensee the
right to a license under the inventions, patent applications and patents
resulting from the Licensed Technology and a notice of Final rejection by the
U.S. Patent Office be issued which on appeal is sustained by the Circuit Court
for the Federal District, royalties will no longer be due under the affected
invention.
5.7 Notwithstanding any other provision of this Agreement, if in
connection with a legal action brought by a third party any court of competent
jurisdiction holds that patent claims of a Patent resulting from the invention
are invalid or unenforceable, then in any such event, Licensee may cease the
payment of royalties based on the invalid or unenforceable patent claims.
Protection of Licensed Technologies
6.1 Licensee shall determine whether to seek patents or take other
necessary legal steps to protect the Licensed Technology, any time after the
date of this Agreement, in such areas of the world, other than the United States
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of America and Canada, as Licensee shall determine. Such foreign patent
protection shall not affect the royalties due and paid under this agreement.
6.2 Licensee, after notice to Licensor that Licensee has elected to seek
such protection, shall have the right to do so, at the Licensee's expense, in
accordance with applicable law, or to take other necessary legal steps to
protect any or all of the Licensed Technology in such other countries. All
patents or other legal rights so granted or obtained based on applications filed
by Licensee shall be the exclusive property of Licensee, and Licensor shall
assign to Licensee all such patents, and other rights in the Licensed
Technology, or application therefore. Upon Licensee's request, Licensor shall,
at Licensee's expense provide reasonable assistance to Licensee, in seeking such
patents or securing such protection as requested by Licensee, including
executing all patent applications, assigning all rights therein to Licensee and
executing any other appropriate documents and papers, as may be legally
required.
Records
7.1 During the term of this Agreement, and for a period of one year
thereafter, Licensee shall keep records of all Sales under this Agreement
(including Sales by sublicensee's, if any) in such form and manner that all
royalties owned hereunder to Licensor during term of this Agreement may be
readily and accurately determined. Such records shall include all information
necessary for Licensee's Auditors to prepare the reports provided for in Section
8 hereinbelow. Licensor or Licensor's Auditors shall have the right, from time
to time, at reasonable times during normal business hours, to examine the
records of Licensee applicable to the calculation of the royalties for the
purpose of verifying the amounts owed to Licensor hereunder and the accuracy of
the reports furnished by Licensee.
Reports and Payments
8.1 During the term of this Agreement, Licensee shall prepare and deliver
to Licensor within 30 days after the end of each calendar quarter, a report
showing:
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(a) the total New Selling Price of all Licensed Products Sold by Licensee
and its sublicensees during that quarter and the total for the year to date;
(b) the royalties owed to Licensor for that quarter and for the year to
date.
8.2 Upon the written request of Licensor received no later than the end of
each calendar year, Licensee's Auditors, shall audit the records described in
paragraph 7.1 above and shall prepare and deliver to Licensor, no later than 30
days following the end of that year, and audit report which sets forth (a) the
total Net Selling Price of all Licensed Products Sold by Licensee and its
sublicensees during that year, and (b) the royalties owed to Licensor pursuant
to Section 7 with respect to that year.
Termination
9.1 Licensor shall have the right to terminate this Agreement on the
occurrence of any one or more of the following events:
(a) Failure of Licensee to make any payment required pursuant to this
Agreement within 30 days after receipt of notice of nonpayment from Licensor.
(b) the breach by Licensee any other material term of this Agreement,
provided that Licensee fails to cure the same within 30 days of written notice
thereof by the Licensor;
(c) the insolvency of the Licensee;
(d) if any proceeding is instituted by Licensee under any bankruptcy,
insolvency or moratorium law, or any proceeding is instituted against Licensee
under any bankruptcy, insolvency or moratorium law and the same is not dismissed
within 60 days thereof;
(e) any assignment by Licensee of substantially all of its assets for the
benefit of creditors; or
(f) placement of the assets of Licensee in the hands of a trustee or
receiver, unless the receivership or trust is
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dissolved within 60 days thereafter.
Assignments of Rights and Obligations
10.1 No assignment of obligations hereunder shall be made by Licensee
without the express written consent of Licensor or his heirs or designees.
10.2 Provided all obligations under this Agreement are current, Licensee
shall have the right, at its sole discretion and at its own costs, to enforce
and/or sue for infringement of any patents issued based on the exclusively
Licensed Technology. Any and all recovery under any infringement cause will
enure to the benefit of Licensee. Licensor agrees to assist and cooperate with
Licensee, at Licensee's expense, to enforce the rights of Licensee under the
Licensed Technology.
Marking
11.1 Licensee shall mark the Licensed Products manufactured by it and/or
sold by it with the appropriate Patent numbers, or with the terms "patented" and
listing the Patent numbers, or "Patents Pending", as is legally appropriate and
as is the usual practice of Licensee.
Severability
12.1 If any provision of this Agreement is declared invalid by a Court of
last resort, then such provision shall be deemed automatically modified to
conform to the requirements for validity as declared at such time, and as so
modified, shall be deemed a provision of this Agreement as though originally
included herein: and, if such provision can not be modified then that provision
shall be deemed deleted from this Agreement. In either case, the remaining
provisions of this Agreement shall remain in full force and effect.
Entire Agreement; Addendums; Amendments
13.1 This Agreement contains the entire agreement of the parties relative
to the subject matter hereof and
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supersedes all prior agreements and understandings between the parties relative
to the subject matter. Addendums and amendments can only be made to this
Agreement if signed by all parties hereto.
Notices
14.1 All payments of royalties, notices required or permitted hereunder
may either be delivered personally, or sent by certified mail with postage or
other charges fully prepaid, addressed to the respective parties hereto at their
addresses set forth above, or to the address last designated the respective
parties.
Applicable Law
15.1 The construction and applicability of this Agreement shall be
determined in accordance with the laws of the State of Florida.
Corporate Authority
16.1 Licensee corporation represents and warrants to Licensor that the
execution, delivery, and performance by it of this Agreement have been duly
authorized by the Board of Directors of Licensee corporation and that when this
Agreement is signed by President of Licensee corporation, the Agreement will be
a valid and binding obligation of the License corporation, enforceable in
accordance with the terms of the Agreement.
17.1 This Agreement may not be assigned without the express written
consent of Licensor.
IN WITNESS WHEREOF, the parties hereto have executed three original copies
of this Agreement as of the day and year set forth above.
/s/ Donovan Bennett /s/ Randol E. Kirk, Individually
- ----------------------------------- --------------------------------
Witness
- ----------------------------------- Rad Source Corp.
Attest
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/s/ Robert Munson Randol E. Kirk, President
- ----------------------------------- --------------------------------
Secretary, Rad Source Corp.
57
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and effective as of
September 15, 1999 between RAD SOURCE TECHNOLOGIES, INC. a Florida corporation
(the "Corporation"), and RANDOL E. KRIK, individual ("Employee").
WHEREAS, Corporation has been organized to engage in the research,
development, manufacture and marketing of irradiation and sterilization devices;
and
WHEREAS, Employee has experience in the research, development, manufacture
and marketing of irradiation and sterilization devices; and
WHEREAS, the Corporation desires to retain the services of the Employee.
THEREFORE, in consideration of the premises and covenants herein set
forth, it is agreed as follows:
1. Employment : Corporation hereby employs Employee and Employee accepts
such employment on the terms and conditions set forth herein. This agreement
replaces and supersedes all prior agreements and understandings between the
parties.
1.1 Employee covenants to perform in good faith his employment
duties as outlined herein, devoting his full productive time, energies and
abilities to the proper and efficient conduct of the business of the Corporation
and its subsidiaries and affiliates and for their exclusive benefit.
1.2 Employee shall not, without the prior written consent of the
Corporation, directly or indirectly, during the tern of this Agreement: (i)
render services of business, professional or commercial nature to any other
person or entity, whether for compensation or otherwise, similar or relating to
the business of the Corporation or its subsidiaries and affiliates, or (ii)
engage in any activity competitive with or adverse to the Corporation's business
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or welfare, whether a lone, as a partner or member, or as an officer, director,
employee or 5% or greater shareholder of a corporation.
2. Term of Employment. Subject to the provisions set forth herein, the
term of Employee's employment hereunder shall continue for one (1) year from the
date of execution of the agreement.
3. Duties. Employee shall be employed in management, product research and
development and such other activities within his field of expertise on behalf of
the Corporation and its subsidiaries and affiliates as requested. As the
Corporation develops, employment duties may change but shall always be
commensurate with his experience and expertise.
4. Compensation. For all services he may render to the Corporation during
the term of this Agreement, including services as officer, director or member of
any committee of the Board of Directors of the Corporation and its subsidiaries
and affiliates, Employee shall receive the following compensation:
4.1 Employee shall receive a base salary at the rate of:
$120,000 per year September 15, 1999 to September 14, 2,000
$140,000 per year September 15, 2,000 to September 14, 2,001
$150,000 per year September 15, 2001 to September 14, 2,002
4.2 Purchase of Stock. During calendar year 1999 the Corporation
shall grant the Employee an option to purchase up to 100,000 shares of
Corporation's common stock at $.20 per share. Such option shall be exercisable
for 3 years from the date of this agreement. In addition, employee shall be
granted 400,000 shares of restricted Common Stock of the Company upon execution
of this agreement.
5. Benefits. During the term of this Agreement, Employee shall be entitled
to the following executive benefits:
5.1 During the period of his employment, Employee shall be
reimbursed for reasonable traveling
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and other business expenses reasonably incurred in connection with the
performance of his duties hereunder, subject to approval and verification as
required in order for the Corporation to comply with applicable laws,
regulations and accounting practices.
5.2 Employee shall be entitled to all other benefits of employment
generally available to members of management of the Corporation.
6. Termination. The employment of Employee may be terminated at any time
by: Mutual agreement; or
(ii) Action of the Board of Directors, on thirty days' prior
written notice in the event of illness or disability of
Employee resulting in failure to discharge his duties under
this Agreement for ninety or more consecutive days or for a
total of one hundred eighty or more days in a period of twelve
consecutive months; or
(iii) Action of the Board of Directors, if it shall be established
that Employee is in material default in the performance of his
obligations, services or duties hereunder (other than for
illness or incapacity) or has materially breached any
provision of this Agreement and such default or breach has
continued for twenty (20) days after written notice of such
non-performance or breach, or has committed any act of
embezzlement or other dishonest conduct.
7. Insurance. Employee agrees that the Corporation may procure insurance
on his life, in such amounts as the Corporation may in its discretion determine,
and with the Company or any of its subsidiaries or affiliates named as the
beneficiary under such policy or policies. Employee agrees that upon request
from the Corporation he will submit to a physical examination and will execute
such application or other documents as may be required for the procurement of
such insurance.
8. Trade Secrets. Employee agrees to execute the Corporation's Employee
Agreement-Trade Secrets and Patents annexed hereto, which agreement is hereby
incorporated herein and made a part hereof.
9. Non-disclosure. During the term of his employment and for two (2) years
after its termination, Employee will not, directly or indirectly, disclose the
names of the Corporation's customers, prospects or sales
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representatives to cease doing business with the Company or its subsidiaries or
affiliates.
Employee shall communicate and make known to the Corporation all knowledge
possessed by him which he may legally impart relating to any methods,
developments, designs, processes, programs, services, and ideas which concern in
any way the business or prospects of the Corporation and its subsidiaries and
affiliates from the time of entering his employment until ther termination
thereof.
10. Conflict of Interest. Employee agrees that during the term of his
employment and any extensions thereof, he will comply with the policy of the
Corporation with respect to the Corporation entering into, directly or
indirectly, any transactions with any business organization or other entity in
which he or any member of his family has a direct or indirect interest.
11. Miscellaneous.
11.1 The failure of either party to enforce any provision of this
Agreement shall not be construed as a waiver of any such provision, nor prevent
such party thereafter from enforcing such provision or any other provision of
this Agreement. The rights granted both parties herein are cumulative and the
election of one shall not constitute a waiver of such party's right to assert
all other legal remedies available under the circumstances.
11.2 Any notice to be given to the Corporation under the terms of
this Agreement shall be addressed to the Corporation, at the address of its
principal place of business, and any notice be given to Employee shall be
addressed to him at his home address last shown on the records of the
Corporation, or such other address as either party may hereafter designate in
writing to the other. Any notice shall be deemed duly given when mailed by
registered or certified mail, postage prepaid, as provided herein.
11.3 The provisions of the Agreement are severable, and if any
provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provisions, or
enforceable
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parts thereof, shall not be affected thereby.
11.4 The rights and obligations of the Corporation under this
Agreement shall inure to the benefit hereto, oral or written, and may not be
modified or terminated orally. No modification, termination or attempted waiver
shall be valid unless in writing, signed by the party against whom such
modification, termination or waiver is sought to be enforced.
12. The Company shall indemnify Mr.Kirk and hold him harmless for all acts
or decisions made by him in good faith while performing services for the
Company. The Company shall obtain coverage for him upon the commencement of his
employment under an insurance policy for the term of this Employment Agreement
covering all Officers and Directors of the Company against lawsuits. The Company
shall pay all expenses including attorney's fees, actually and necessarily
incurred by Mr. Kirk in connection with the defense of such act, suit or
proceeding, and in connection with any related appeal, including the cost of
court settlements.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
RAD SOURCE TECHNOLOGIES, INC.
By: /s/ RANDOL E. KIRK
-----------------------------
President
/s/ RANDOL E. KIRK
-----------------------------
RANDOL E. KIRK
September 15, 1999
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EXHIBIT 10.3
October 20, 1998
Mr. Randol E. Kirk, President
Rad Source, Inc. VIA FAX 954-755-5306
475 Ramblewood Drive, Suite 207
Coral Springs, Florida 33071
Dear Mr. Kirk:
This letter sets forth the proposal of Capital International Holdings, Inc.
(CHI) and it's affiliates to render investment banking services to Rad Source,
Inc. ("the Company" in connection with a public offering of common shares under
Rule 504D of "the Company" for working capital purposes of up to $680,000 (Six
Hundred and Eighty Thousand Dollars)
1. Bridge Financing: CIH shall use its "Best Efforts" to obtain a bridge loan
for the Company up to a total amount of $100,000.00. The bridge loan shall be
repaid from the proceeds of the securities offering described below (the
Offering) or 120 days after each loan funding, whichever occurs earlier, with
interest of 15% per annum. The lender will require an equity participation of up
to 33% of the equity capitalization of the Company, post offering. The Company,
upon receipt of any bridge loan funds, will immediately submit all necessary
documentation for a patent pertaining to the linear X-ray components and design
associated with high output X-ray irradiation.
2. CIH will commence the undertaking of this offering pending the completion of
Due Diligence of the Company and updated financial statements to be in
compliance with current Securities and Exchange Commission regulations.
Additionally, current documentation for due diligence requirements will be
requested by CIS and it is expected the "Company" will respond to these requests
in a timely fashion. Completion of this phase of the offering should be
completed within two weeks of acceptance of this proposal.
3. CIH proposes to have Capital International Securities Group, Inc. (CIS) use
its best efforts to offer securities of the Company in an offering (the
Offering) under Rule 504, Regulation D, of a maximum of $680,000 of common
Stock. Such offering to be exempt from the formal registration requirements of
the Securities and Exchange Act of 1933, as amended, pursuant to Rule 504,
Regulation D. CIS and the Company shall have the right to approve the ultimate
offering, including but not limited to the offering price, the offering
memorandum which will be provided by the Company and all ancillary
documentation. Such minimum offering should be completed within (8) weeks of
delivery of approved offering documents to CIS unless extended by the Company.
Contemplated pricing of said offering is $2.00 per share.
The Company represents to CIS that the offering documents provided by the
Company for use in the foregoing offering will be complete and accurate in all
material respects, will meet the disclosure requirements of the Securities Act
of 1933 and will not include and untrue statement of a material fact or omit to
state any material fact require to
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be stated therein or necessary to make the statements made therein, in light of
the circumstances under which they are made, not misleading.
All information furnished to CIS by the Company will be accurate and complete in
all material respects at the time furnished and CIS does not assume
responsibility for the information furnished. The Company confirms that CIS in
rendering its services hereunder may use and rely on such information without
independent verification thereof.
4. The Company has requested Capital Corporate Finance Inc. (CCF) to identify,
conduct due diligence, and negotiate preliminary terms of a reverse merger with
a publicly held corporation. The Company shall enter into a binding agreement
with the public company to retire to treasury all control shares currently held
by management and directors. Additionally and independently, the company will
enter into a two (2) year consulting agreement pertaining to investor relation
purposes with the legal representative of the public corporation who will be
paid in full by the Company within 15 days after completion of the public
offering.
Capital Corporate Finance, Inc. (CCF) shall be entitled to purchase at par value
One Percent (1%) of the total issued and outstanding common of the Company prior
to the offering (30,000 shares) as well as the purchase of One Hundred Thousand
(100,000) common stock purchase warrants, at an exercise price of Three Dollars
($3.00) per share at a purchase price of One Cent ($.01) per warrant.
5. The suggested preliminary structure of the Company's capitalization post
offering, would total Three Million, Five Hundred Thousand Shares (3,500,000) of
which current management, officers and directors would own Two Million, Two
Hundred, Fifty Five Thousand Shares. The remaining shares would be held by
public stockholders and bridge loan sources. The proposed public offering would
include 340,000 common shares at an offering price of Two Dollars ($2.00) per
share. The combined aggregate dollar amount of the sale of the common stock and
the exercise of the warrants could total $980,000.00 (Nine Hundred, Eighty
Thousand Dollars.)
6. The Company agrees to pay CIS a fee equal to 10% of gross proceeds of the
Offering, a 2% financial consulting fee to CIH and non accountable expense
allowance equal to 3% of the gross proceeds of the offering to CCF. The Company
will be responsible for blue sky filings in states requested by CIS.
The Company will enter into a financial consulting agreement with Capital
Corporate Finance, Inc. (CCF) with respect to mergers and acquisitions whereby
Capital Corporate Finance will be retained for a period of One (1) Year upon
successful completion of the offering at the rate of $5,000 (Five Thousand
Dollars) per month.
7. CIS shall also have the right of first refusal for a period of two years
after the date hereof (the "Term"), contingent on CIS successful completion of
the Offering, to act as managing underwriter or offering agent for any public
offerings or private placements of its securities contemplated by the Company or
any of its subsidiaries. The right of first refusal herein shall not apply to
borrowing by the Company from banks and other lending institutions unless
otherwise arranged by CIS. This right of first refusal shall be on terms equal
to those written proposal by third parties, and CIS shall be required to
promptly advise the Company as to whether it desires to exercise the right of
first refusal herein, and in all events it shall advise the Company within a
period of 30 days after a proposal is submitted by the Company to CIS.
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8. In addition to any fees that may be payable to CIS, and regardless of whether
a financing is consummated, the Company hereby agrees to reimburse CIS for all
of its accountable out-of-pocket fees and expenses arising out of CIS efforts on
the Company's behalf, provided that once such expenses reach $5,000 any
additional expenses shall require express written consent. Reasonable
out-of-pocket fees and expenses include, but are not limited to, costs such as
the cost of legal fees, telephone, telecopier, courier services, accommodations,
travel, printing and postage. All such expenses shall be credited against the
non-accountable expense allowance payable upon completion of the offering. Upon
the earlier of the termination or expiration of the Agreement or the
consummation of the Offering, all outstanding costs and expenses shall be due
and payable.
9. The Company will indemnify and hold harmless, CIH, CIS and CCF, and its
officers, directors and employees against all claims, damages, liability and
litigation expenses in connection with its investigation and defense of any
claims as the same are incurred, which are related to or arise out of any
inaccuracy in any information provided in the offering documents provided to
CIH, CIS or CCF in connection with the "Offering".
CIH, CIS, and CCF agrees to indemnify and hold harmless the Company and its
officers, directors, and employees against all claims, damages, liability and
litigation expenses (including the expense of the Company and its affiliates, in
connection with its investigation and defense of any claim) as the same are
incurred, which are related to or arise out of its activities in connection with
the "Offering"
10. The Company shall pay CIH a commitment fee of $1,500 upon execution hereof.
11. The services or advice to be provided by CIH, CIS or CCF hereunder shall not
be disclosed publicly or made available to third parties not affiliated with the
Company without CIH, CIS or CCF prior written approval, shall not be
unreasonably withheld, except as required by law, including but not limited to
the Company's obligations under the applicable securities laws. All information
concerning the Company that is not publicly available will be treated by CIH,
CIS and CCF as confidential and will be revealed to third parties only on a need
to know basis, unless legally compelled.
12. This Agreement shall be governed by the laws of the State of Florida and may
not be amended or modified except in writing, signed by both parties.
13. This Agreement and all rights and obligations thereunder shall be binding
upon and insure to the benefit of each party's successors and may not be
assigned without the other party's consent.
14. The Company agrees to allow CIS or CCF to have a representative attend all
shareholders and Board of Directors meeting for the during the term of this
Agreement, CIS or CCF will receive ten (10) days written notice in advance of
such meetings. Additionally, CIS or CCF shall have the right to appoint one
director of the Company during the term of the engagement hereof.
15. The present shareholders shall agree to a two (2) year lock up of their
stock positions unless amended in writing by Capital International Holdings,
Inc.
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If the foregoing meets with your approval and is in accordance with your
understanding, please so indicate by signing and returning the enclosed
duplicate of this letter.
Yours very truly,
Capital Corporate Finance Inc. Rad Source, Inc.
By: /s/ Anthony Leavitt By: /s/ Randol E. Kirk
-------------------- --------------------------
Anthony Leavitt, Director Randol E. Kirk, President
Agreed to and accepted this 20th day of October, 1998
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Exhibit 10.4
RAD SOURCE TECHNOGOIES, INC. DEALER
AGREEMENT
THIS AGREEMENT is made and entered into by and between RAD SOURCE TECHNOLOGIES,
INC., inc. hereinafter called "Manufacturer", and US I INC., HEREINAFTER CALLED
"Dealer".
WITNESSETH:
WHEREAS, the Manufacturer is the supplier of the RS 3000 line, and other similar
and related products,
WHEREAS, the Manufacturer is desirous of introducing the same to the public and
have the same marked;
WHEREAS, the Manufacturer hereby designates and appoints the Dealer to be the
sole Dealer for Maine, Massachusetts, Vermont, New Hampshire, Delaware, New
York, New Jersey, Rhode Island, and the Eastern half of Pennsylvania, located in
the United States of America, for that purpose;
NOW THEREFORE, in consideration promises herein expressed, the Manufacturer
agrees to supply the RS 3000 Line and the Dealer agrees to sell the RS 3000 Line
throughout the Dealer's exclusive territory, under the following terms and
conditions.
TERMS AND CONDITIONS OF DEALER
1. The Dealer does hereby agree contemporaneous wit the execution of this
agreement to sell 8 (eight) (quantity) RS 3000s per year to commence October 1,
1999 (date). The cost of the RS 3000's purchased from the Manufacturer is set
forth in the price list described as Exhibit "A" attached hereto and
incorporated herein.
2. The Dealer, in order to maintain his exclusive dealership in the
afore-defined territory must be responsible through the Manufacturer for the
sales of the RS 3000 Line in the following minimum amounts.
A. An average of 8 (eight) (quantity) RS 3000s per year commencing on December
1, 1999 (date) with one unit per month therefore for 8 (eight) months.
B. A thirty (30) day grace period will be allowed at the end of each year to
comply with the above-mentioned quantity of RS 3000s to be sold, in no event
shall the Dealer maintain this exclusive dealership unless the Dealer sneers the
above sales requirements then in that event the dealership may be canceled and
this agreement voided at the option of the Manufactures.
3. The Dealer further agrees, at the sole cost of the Dealer, to provide a
service technician trained in installing and repairing the RS 3000.
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4. The Dealer further acknowledges that it shall be the sole responsibility of
the dealer to collect for the payment of any RS 3000 sold by the dealership,
including applicable taxes and freight charges. The Dealer will pay to the
Manufacturer its share of the purchase price prior to the shipment of the RS
3000.
TERMS AND CONDITIONS OF THE MANUFACTURER
1. The Manufacturer agrees for the considerations herein expressed, to grant
unto dealer a sole and exclusive dealership for the afore-defined territory
during the term of this agreement.
2. The manufacturer agrees and acknowledges that the Dealer is the sole dealer
of the RS 3000 line and other related products of the Manufacturer and further
agrees that all RS 3000's and related products sold in the defined territory
will be distributed through the Dealer and all such RS 3000's sold will be
credited against the Dealers minimum sales requirement as shown in this
agreement.
3. The Manufacturer further agrees that it will not compete directly or
indirectly with the Dealer within the Dealer's territory in the sale of any RS
3000 or related products produced from RS 3000. The Manufacturer further agrees
to refer all inquiries for the purchase of any RS 3000 or related products from
the afore-defined territory to the Dealer.
4. The Manufacturer further agrees to sell the Dealer the RS 3000 line at a cost
described in Exhibit "A" and further agrees subject to prior written approval by
the Manufacturer, to reimburse the Dealer for work done on any RS 3000 which is
the result of defective parts.
TERMS
1. The term of this agreement will be for three years. In the event the Dealer
fails to maintain that number of sales, the Manufacturer at its option, may
terminate this agreement and retract the Dealer's exclusive dealership as its
sole remedy straw.
EFFECT OF TERMINATION
1. In the event of termination for whatever reason, including but not limited to
Rad Source Technologies, Inc. easing to be manufacturer, this agreement shall be
considered null and void and the Dealer as well as the Manufacturer will be
released from all terms hereunder.
68
<PAGE>
ADDITIONAL TERMS
1. This agreement shall be construed under and in accordance with the laws of
the state of Florida.
Venus for any cause of action arising as a result of this contract between
the parties Be Coral Springs (city) Broward (county) Florida (state).
2. The Manufacturer and Dealer further agree that in the event of any litigation
arising from the sale or distribution of the RS 3000 line, the Manufacturer will
indemnify and hold harmless the Dealer from any loss it may suffer as a result
of the failure on the part of the Manufacturer to deliver said products as
agreed. In the event of any other litigation the Manufacturer will only be
responsible for damages, injuries to persons or property caused by faulty
workmanship or material. Signed and executed this 7th day of October, 1998
Manufacturer:
Rad Source Technologies, Inc.
By: /s/ Randol E. Kirk, President
-----------------------------
US I, Inc. Dealer
By: /s/ Ben Weinstach, President
-----------------------------
69
<PAGE>
RAD o SOURCE
TECHNOLOGIES
- --------------------------------------------------------------------------------
QUOTATION TO:
- --------------------------------------------------------------------------------
DEALER DATE: 9/30/1999
NUMBER: 2000
POB: Atlanta, Ga
TERMS: NET
- --------------------------------------------------------------------------------
RS 3000 CABINET X-RAY BLOOD IRRADIATOR
The RS3000 is a processing x-ray blood irradiator including:
High Voltage Generators
Heavy Duty X-ray Tube
Shielded Radiation Chamber
Controller Electronics
This unit is built to meet all requirements set forth by 21CFR 1020.4 pertaining
to cabinet x-ray units and has met the requirements for medical device marketing
under a FDA 510(k) submission.
Price $79,900.00
Warranty: One year parts and labor.
70
EXHIBIT 21
LIST OF SUBSIDARIES OF RAD SOURCE TECHNOLOGIES, IC.
1. Rad Source Inc., a Florida Corporation
71
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